On November 28, 2023, Fireblocks, an innovative digital asset operating platform, announced the introduction of ‘Off Exchange’, a first-of-its-kind solution that aims to transform the way institutional traders interact with digital asset exchanges. This groundbreaking platform is designed to mitigate the inherent counterparty risks that have long plagued the cryptocurrency trading market.
In digital asset trading, counterparty risk includes a variety of potential risks, including the threat of cyber hacking, bankruptcy risk, and possible misappropriation of customer funds. These risks are amplified in the cryptocurrency trading market due to the dual role of exchanges as custodians and trading venues. Past events, such as the FTX collapse, have highlighted these vulnerabilities in stark relief.
Fireblocks’ Off Exchange platform represents a significant technological leap forward using Multi-Party Computing (MPC) technology. This innovative approach allows traders to trade directly on centralized exchanges through a shared, on-chain MPC wallet. The shared wallet model ensures traders maintain control over their assets, significantly reducing the risk of loss due to exchange-related issues such as hacking, bankruptcy, and fraud.
The integration of Fireblocks Off Exchange with Deribit, a leading digital asset derivatives trading platform, is an important milestone on the journey towards safer and more efficient digital asset trading. The collaboration signals growing awareness of the need for enhanced security measures in the rapidly growing digital asset derivatives sector.
Fireblocks Off Exchange promises several key benefits to the trading community. First, it enhances security by allowing traders to maintain control of their assets in a shared wallet, thereby reducing the risk of asset misuse. Second, it increases market liquidity by enabling real-time settlement of trades, allowing traders to move capital quickly and efficiently between various trading venues and counterparties.
Off Exchange has received significant attention from the institutional trading community since its announcement. Hundreds of hedge funds, market makers, liquidity providers and brokerages have joined the waiting list to join the platform. Our integration with Deribit is just the beginning, and we plan to expand support to additional global exchanges to further expand the impact and reach of this innovative solution.
The launch of Fireblocks Off Exchange is a pivotal moment in our quest to create a more secure and efficient digital asset trading environment. Fireblocks is at the forefront of leveraging the latest advancements in MPC and blockchain technology to reduce counterparty risk, a move that will likely encourage more traditional financial institutions to enter the cryptocurrency market.
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