In a November 28 update, the renowned Multi-party computation (MPC) wallet provider Fireblocks was debuting a new trading system, Off Exchange, for institutional clients. The Fireblocks team confirmed that the new trading platform will leverage emerging technologies to allow institutional customers to swap tokens.
This development has replaced the initial process requiring customers to deposit their tokens on the exchange before swapping. The report demonstrated that Fireblocks’ new trading platform aimed to reduce the inherent risks associated with third-party involvement in centralized exchanges.
Fireblocks Seeks to Mitigate Centralized Exchange Risk
With the changes in the financial sector, the New York-based tech firm confirmed implementing diverse security measures to prevent the recurrence of an FTX saga. A statement from the chief executive of Fireblocks, Michael Shaulov, highlighted the features and benefits of the new Off Exchange.
The CEO stated that the new trading platform has a shared MPC wallet that can only be accessed through a unique private key. The executive explained that the team behind the Off Exchange embedded three shards on the private key for security purposes.
The first shard belongs to the trading firm, while the exchange will hold the second shard. The executive stated that the oracle would own the third shard. The exciting integration of the three shards aims to ensure that the assets on the MPC wallets are safe and secure.
According to the CEO, the user must verify the transaction on the exchange and trading shards. The withdrawal procedure aims to prevent the trader and the exchange from unilaterally withdrawing funds.
Features of Off-Exchange
The executive confirmed that to proceed with the withdrawal process, the exchange and the trader must initiate the transaction through signing. Mr Shaulov explained that the third shard will only be used under particular conditions.
The CEO admitted that the trader or the exchange might not be available simultaneously. If this happens, the third-party oracle can provide the second signature. Shaulov underlined that the third-party oracle is only involved in a transaction when the trader or the exchange fails to cooperate.
The CEO explained that in case of an unforeseen circumstance, such as a hacking incident that might undermine the operation of an exchange for a specified time, then the trader and the third-party oracle are allowed to proceed with the transaction.
Interestingly the launching of the Off Exchange will enable the Fireblocks team to prevent financial fraud. The tech company regretted that the ordinary structure of the crypto trading platform had become a common ground for attackers since normally the exchange had complete control of the custodial and trading services.
As a safety measure, the Fireblocks will ensure that all assets are stored on the MPC shared wallets, and neither the exchange nor the trader can proceed with the withdrawal without informing the other.
Hackers Target Centralized Crypto Exchanges
The latest development of Fireblocks aims to shield centralized exchanges from counterparty risks affecting the best-performing crypto exchanges.
For years, the attackers have been preying on the centralized platforms to heist measurable amounts of customers’ funds. In 2014, the Tokyo-based crypto exchange Mt.Gox was hit by a multimillion-dollar attack that lost assets worth $473 million.
After the Mt.Gox incident, the attacker launched malicious attacks on other centralized crypto exchanges. A similar incident occurred in 2018 after the attackers heisted a measurable amount of funds from Quadriga.
The rise of crypto scams has forced crypto and fintech firms taking preventive measures to ensure the customers’ funds are secure. The Fireblock’s latest development mirrors the Off Exchange feature on QCP Capital, Zerocap, and BlockTech.
The Off Exchange feature will soon be available on Gate. io,Bitget, Coinhako, OneTrading HTX, Bybit, and WhiteBIT. The remarkable development of Off Exchange aims to meet the ever-evolving needs of institutional clients.