LogoLogo
  • overview
    • Introduction
    • Architecture and Roles
    • Fireblocks Embedded Wallet
  • Features
    • Supported Networks and Tokens
    • Organization Account and Wallet
    • Passphrase and MPC Key
    • Borrowing and Lending
    • Repayment
    • Liquidation and Physical Delivery
    • Adding and Removing Collateral
    • Withdrawal
    • Settlement Mechanism
    • Transaction Fee
  • Security
    • Security Overview
    • Account and MPC Key Share Security
    • Cloud Infrastructure Security
    • Full Key Recovery
    • Disaster Recovery for Fireblocks Key Share
  • Hypernative 24/7 On-Chain Security Analysis
  • Smart Contract Audit
  • Tutorials
    • MPC Key Generation
    • Wallet Creation and User Invitation
    • Joining Organization
Powered by GitBook
On this page
  • How On-Chain Settlement Works
  • Key Features
  • Benefits of On-Chain Settlement
Export as PDF
  1. Features

Settlement Mechanism

TSI employs a robust on-chain settlement mechanism to ensure the secure, efficient, and trustless execution of all transactions on the platform. This mechanism utilizes smart contracts to orchestrate peer-to-peer transfers, guaranteeing the simultaneous exchange of assets and minimizing counterparty risk for borrowers and lenders.

How On-Chain Settlement Works

  1. Direct Peer-to-Peer Transfers:

    1. Assets are transferred directly between user wallets, not through the smart contract.

    2. The smart contract's detector function confirms that both parties have signed their respective transactions.

    3. Only after both signatures are confirmed does the smart contract trigger the actual transfers.

  2. Smart Contract Orchestration:

    1. The smart contract coordinates the timing and execution of transfers to ensure they occur simultaneously.

    2. This ensures that neither party can receive assets without also transferring their corresponding assets.

    3. All transfers are atomic - they either all succeed together or all fail together.

Key Features

  1. Guaranteed Settlement:

    1. The system ensures that either both sides of the transaction are completed, or neither is, eliminating the risk of loss for either party.

    2. This applies to all transaction types: loan creation, repayment, liquidation, and collateral adjustments.

  2. Transaction Cancellation:

    1. If one party fails to sign their transaction within the designated timeframe, the associated transactions are automatically cancelled. This ensures their assets remain in their wallet.

  3. Security Without Custody:

    1. The settlement mechanism provides security without requiring TSI to take custody of user assets.

    2. All assets remain in user wallets until transfers are executed, eliminating custodial risk.

Benefits of On-Chain Settlement

  1. Reduced Counterparty Risk: TSI's design significantly minimizes counterparty risk by ensuring that TSI never has direct control over client assets. Even though TSI deploys the smart contracts, the platform cannot access or manipulate the funds involved in the settlement process. This is achieved through:

    1. Restricted Smart Contract Functionality: The smart contracts are purpose-built for settlement with predefined rules encoded in their code. Their execution is automated, triggered only when specific conditions are met. This removes any manual intervention or discretion by TSI in the settlement process. The contracts have limited access and cannot arbitrarily transfer assets outside the predefined settlement flow.

    2. Transparency and Auditability: The smart contract code will be transparent to TSI clients, allowing clients to verify the functionality of the smart contract and ensure that it adheres to the stated rules.

    3. Strict audit: The smart contract will be audited by reputational companies, minimizing the risk.

    4. Updates and Notifications: If any updates are made to the smart contract code, TSI clients will be informed to ensure transparency and maintain trust.

    5. Increased Efficiency: The automated nature of smart contracts streamlines the settlement process, reducing manual intervention and potential delays.

    6. Atomic Settlement: Guarantees that both sides of a transaction are executed simultaneously, preventing any party from experiencing a loss due to non-completion.

    7. Automatic Asset Return: If one party fails to fulfill their transfer obligation, the smart contract automatically returns any previously transferred assets to the initiating party. This ensures that funds are not lost due to a counterparty's failure to complete their part of the transaction.

    8. Secure Asset Handling: Assets are not deposited into the smart contract for settlement. Instead, the contract facilitates direct transfers between parties, eliminating concerns about assets being locked in the contract or potential rug-pull risks. This approach prioritizes the security and control of user funds.

TSI's on-chain settlement mechanism is a core component of its institutional-grade platform, providing a secure, efficient, and reliable framework for all transactions.

PreviousWithdrawalNextTransaction Fee

Last updated 12 days ago