Off-Exchange Settlement

The reason OpenDelta has the ability to scale its perpetual bonds to hundreds of billions of dollars in TVL is because it is able to access the CeFi crypto derivatives markets in a trust-minimized way. Historically, centralized exchanges have been prone to hacks and unexpected bankruptcies. As a result, mitigation of the counterparty risk connected to trading on centralized exchanges is of paramount importance.

We mitigate this problem by employing a system of Off-Exchange Settlement (OES), whereby all collateral is held on non-custodial wallets completely segregated from the exchanges and controlled by OpenDelta and third-party institutional-grade custodians. The funds that are exposed to the exchange are merely any unsettled P&L of the position. Periodic settlements (e.g once per day) ensure that this P&L never grows too large. In a scenario where an exchange unexpectedly ceases operations or is hacked, OpenDelta only incurs a loss on that day's unsettled P&L. The rest of the collateral is safely held in the segregated wallet.

In order to use OES we have partnered with top of the line and fully licenced custodians.

Our current OES provider is Copper. In the future we are planning to add more custodians to our custody system to diversify away the dependence on a single company.