Overview

Fireblocks Off Exchange introduces Collateral Vault Accounts (CVAs), which are Fireblocks vault accounts that programmatically lock and mirror funds to the connected exchange account. CVAs are created on a separate collateral workspace from your main workspace. This isolates the backup recovery kits for CVAs from your main workspace, preventing the collateral locking mechanism from becoming vulnerable.

CVAs act as a middle ground between you and the exchange. Any funds deposited into the CVA are automatically locked so that the exchange has the confidence to provide you with an available balance for trading. Available balance is defined as all assets available for trading on the exchange.

There is recourse in place to cover situations where you or the exchange are in default of the terms or SLAs. There is also recourse to cover a situation where Fireblocks operations are unexpectedly impacted, and the Off-Exchange feature becomes suspended or inaccessible.

A dedicated collateral workspace segregates the CVAs from your main workspace vault accounts. This workspace enables you to manage users with access to the collateral vaults. CVA balances, adding, and removing collateral are not shown in the collateral workspace. These details are recorded in the main workspace, in tandem with the connected exchange account balance.

You can access your Collateral workspace by selecting Account and switching to the collateral workspace. However, you cannot see or perform operations from your CVA within the collateral workspace, which is only used for administrative purposes. The collateral workspaces naming convention is: “Collaterals +<main-workspace-name>.”

Enabling Fireblocks Off Exchange

Follow these steps to perform the initial setup:

1. Sign the agreement via your Sales or CSM representative.
   • Mention in which workspace you would like the product to be enabled.
2. An email invite will be sent to all the workspace’s users so they can join the new Collateral Workspace.
3. In your new collateral workspace, a Collateral Signer user and a pairing token are created for you. The exchange retrieves its token via the API. If needed, you can also create a pairing token and provide it to the exchange by yourself.
4. The owner receives a request to approve a DRS kit that will be stored with Coincover in the Fireblocks mobile app.
5. Once the Collateral Signer and the DRS kit are ready, the Off-Exchange feature becomes active.
6. Make sure the relevant exchange account* is also connected in your main workspace.

To begin trading with Fireblocks Off-Exchange, go to Exchanges in your main workspace (not the collateral workspace), and select Deposit > Add Collateral for the desired exchange. The exchange verifies that you are successfully onboarded, a CVA is created in your Collateral workspace, and you can begin trading on the exchange using your locked collateral.

Onboarding users to the collateral workspace

All main workspace users are invited to join the collateral workspace. If you want to be able to sign settlement transactions and CVA withdrawals, you must complete the collateral workspace onboarding process. Any additional users added to the main workspace after the initial onboarding process is complete must be added to the collateral workspace as well for them to be able to sign settlement transactions and CVA withdrawals.

Adding collateral to an exchange account

To add funds to your exchange account using the Fireblocks Off Exchange solution:

1. Go to Accounts > Exchanges in the main workspace (NOT the collateral workspace) of your Fireblocks Console.
2. Find the CVA in which you want to deposit funds, then select Deposit > Add collateral.
3. On the New Transfer window, select the asset you want to transfer and the source vault account for the transfer. Note that the destination is already configured as a Collateral Vault Account.
4. Enter the net amount you want to transfer and set the fee you want to pay.
   
5. Select Create Transfer. 

The exchange continuously monitors the on-chain balance. Once the on-chain transaction is complete, the exchange will instantly update your credit on their side accordingly.

Settling with the exchange 

Settlements can be initiated by you or the exchange. When supported, it can be on-demand or based on certain predefined thresholds (see the Supported Exchanges table).

Exchange-initiated settlements

Some settlements are initiated by the exchange itself as per their settlement cycles. For specific times and frequencies see our Supported Exchanges and Assets for Fireblocks Off Exchange article.

Customer-initiated settlements

The customer-initiated settlement option, which is not supported by all exchanges, allows you to ask the exchange to calculate the amounts due for settlements. This provides visibility on the position intra-settlement cycle. Some of the exchanges also allow you to trigger these ad-hoc settlements without waiting for the settlement cycle to commence.

To initiate and complete a settlement:

1. Go to the Exchanges tab in your Fireblocks Console.
2. Select the exchange account you want to settle with, and then select Settle.
3. Review the settlement instructions generated by the exchange, and then select Settle if you agree.
   
4. You will automatically see any incoming transactions as a result of the settlement. Sign any outgoing transactions as a result of the settlement. These will also be automatically initiated.

For the sake of trading continuity, settlement to the CVA does not alter your available balance on the exchange.

Removing collateral from an exchange account

You can request the exchange to remove your collateral from the CVA, and upon the request’s acceptance - a transaction is created in Fireblocks to move the funds from your CVA to any destination, such as an internal Fireblocks vault account, counterparty, whitelisted address, or even another exchange account.

To remove collateral from your Collateral Vault Account:

1. Go to the Exchanges tab in your Fireblocks Console.
2. Select the Withdraw button next to the exchange account you want to withdraw from, and select Remove collateral.
   
3. Alternatively, you may select the exchange account and then select Remove Collateral for a specific asset.
4. Select the asset you want to withdraw from your CVA.
5. Select the destination where the withdrawn funds should be sent.
6. Enter the withdrawal amount.
   
7. Select Create Transfer.

Once funds are approved for withdrawal by the exchange, the available balance on the exchange is reduced appropriately.

Backup and recovery kits

You cannot personally hold recovery kits for collateral workspaces in order to prevent cases where locked assets are recovered outside of the Fireblocks wallet. Recovery kits will be available for storing on Coincover. You will need to define in the Coincover order form who should Coincover hand the kit to in case Fireblocks operations are down and assets are still locked in CVAs. The kit’s receiver can be either yourself, or the exchange.