Multi-party computation (MPC) wallet provider Fireblocks has released a new trading system for institutions that use centralized exchanges, according to a Nov. 28 announcement. Called “Off Exchange,” the new system allows institutional traders to swap tokens without first depositing them on the exchange. Fireblocks claimed this system would help to eliminate counterparty risk on centralized exchanges and prevent future FTX-like collapses.
In a conversation with Cointelegraph, Fireblocks co-founder and CEO Michael Shaulov explained how Off Exchange works. He said it allows trading firms to deposit assets to a “shared” or “interlocked” MPC wallet, whose private key comprises three shards. The first shard is held by the trading firm, the second by the exchange, and the third is “triggered by an oracle.” For a transaction in this wallet to be confirmed, two out of three shards must be used to sign the transaction. This means that neither the trader nor the exchange can unilaterally withdraw assets.