Unipay
  • OVERVIEW
  • 💫Unipay Overview
    • Solution USDu
  • Solution Overview
    • USDu Overview
      • Delta-Neutral Stability
      • Off Exchange Settlement
    • Risks
      • Program/Smart Contract Risk
      • Funding Rate Risk
      • Liquidation Risk
      • Custodial Risk
  • Solution Design
    • Minting USDu
      • Mint Validity Checks
    • Stake USDu
      • User Security Measures
  • Backing Custody & Security
    • Overview
      • Off-Exchange Settlement in detail
  • Resources
    • Brand Kit
    • General Risk Disclosures
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On this page
  • How Off-Exchange Settlement Works
  • Advantages of Off-Exchange Settlement
  • Risk Mitigation
  • Commitment to Efficiency and Security
  1. Solution Overview
  2. USDu Overview

Off Exchange Settlement

Unipay leverages Off-Exchange Settlement (OES) mechanisms to securely manage mapped collateral and execute delta-neutral hedging strategies on centralized exchanges (CEXs). This approach bridges the transparency of decentralized blockchain systems with the liquidity and efficiency of centralized trading venues.

How Off-Exchange Settlement Works

  1. Collateral Mapping Unipay maps decentralized collateral, such as SOL, ETH, and BTC, to off-exchange settlement platforms like Copper and Ceffu. These platforms act as secure custodians, enabling seamless interactions with centralized exchanges without compromising asset security.

  2. Hedging and Arbitrage Execution Mapped assets are used to open short positions in perpetual futures markets on centralized exchanges. This enables Unipay to implement delta-neutral strategies, ensuring collateral stability while capturing funding rate arbitrage opportunities.

  3. Settlement and Rebalancing Off-exchange platforms handle settlement and periodic rebalancing of positions to maintain the stability and efficiency of hedging operations. This ensures the protocol can adapt to market changes while minimizing exposure to volatility.

Advantages of Off-Exchange Settlement

  • Increased Liquidity Access Centralized exchanges provide deeper liquidity compared to decentralized platforms, allowing Unipay to scale its delta-neutral strategies and stablecoin issuance more effectively.

  • Enhanced Security By leveraging trusted custodial solutions, Unipay minimizes risks associated with holding large amounts of collateral directly on centralized exchanges.

  • Regulatory Compliance Platforms like Copper and Ceffu are designed with compliance in mind, enabling Unipay to operate within regulated frameworks while maintaining the integrity of its operations.

  • Capital Efficiency Off-exchange settlement reduces on-chain transaction costs and optimizes capital allocation, ensuring the system remains both scalable and efficient.

Risk Mitigation

To address potential risks associated with Off-Exchange Settlement, Unipay has implemented the following measures:

  • Robust Custodial Standards Unipay collaborates with custodial platforms that use advanced security protocols, such as multi-party computation (MPC) and asset segregation.

  • Redundant Systems Collateral is distributed across multiple custodial providers, reducing reliance on any single platform and ensuring continuous operations in case of outages.

  • Real-Time Monitoring Continuous tracking of collateral and market conditions ensures rapid identification and response to potential risks, such as margin calls or liquidity shortages.

  • Transparent Operations All collateral mappings and settlement activities are logged and auditable on-chain, maintaining trust and accountability for users and stakeholders.

Commitment to Efficiency and Security

Unipay’s Off-Exchange Settlement framework combines the strengths of centralized and decentralized systems to deliver a secure, scalable, and efficient solution for USDu issuance and yield generation. By bridging these two ecosystems, Unipay sets a new standard for stablecoin operations and financial innovation.

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Last updated 5 months ago