Discover how you can trade efficiently as you would on a traditional exchange, yet retain complete control of your assets. This is made possible through GRVT’s revolutionary hybrid exchange.
Before Web3, the idea of self-custody rarely crossed our minds. We typically entrusted third-party intermediaries like a bank or an exchange to safeguard our valuable assets. So, what is self-custody, why is it becoming increasingly important, and can it coexist with centralized exchanges?
What is self-custody?
Think of self-custody as having your own personal vault in a digital world, or the blockchain. And this digital vault is securely gated by a key or passcode that you alone possess. Users take complete control and responsibility for their digital assets, eliminating the need for third-party custodians. This not only empowers users with full ownership but also enhances the security of their assets.
Why is self-custody increasingly important?
Traditionally, when you trade on a centralized exchange, you entrust this third-party intermediary to hold, manage, and safeguard your assets. However, this arrangement comes with counterparty risk — the chance that the exchange might fail to meet its obligations. Recent incidents involving centralized crypto platforms — from Celsius to FTX — as well as traditional banks like Silvergate and Silicon Valley Bank, have shown that entrusting funds to central entities can be risky. But if you keep your funds in your digital vault, even if the interacting banks, exchanges, or other counterparties fail — your funds remain safe.
Introducing GRVT’s self-custodial trading
What if you could combine the trading efficiency of a centralized exchange like Binance and Coinbase with full control over your funds? This is the innovation behind GRVT, a hybrid exchange (HEX). It integrates the high-performance trading features of a centralized platform with blockchain security to effectively eliminate exchange counterparty risk.
This is achieved by a smart mix of off-chain order matchings and on-chain settlements. Trade orders are swiftly matched off-chain via GRVT’s central limit order book, which boasts a speed of 600,000 transactions per second with under 2 milliseconds of latency — one of the best in the industry. Trades are then finalized on-chain for transparency and accuracy, facilitated by smart contracts deployed on zk-Sync, a high-performance Layer-2 blockchain.
Understanding two key self-custody concepts: wallet and private key
The foundation of self-custody lies in creating a cryptocurrency wallet. Contrary to what the name implies, a crypto wallet doesn’t store your digital assets. It’s a software or hardware tool designed to securely store your private key — a secret passcode known only to you.
Think of your private key as the unique key or passcode to your personal digital vault containing all your assets. Beyond just unlocking access, this private key also serves as your digital signature, allowing you to authorize and validate transactions on the blockchain, whether you’re buying, selling, or transferring digital assets.
How GRVT’s self-custody trading works
GRVT is designed to offer the same trading experience as a central exchange such as Binance but with a difference. It offers self-custody to alleviate exchange counterparty risk — so that if anything happens to the exchange, your funds remain safe and under your full control at all times.
Getting started with self-custodial trading in four steps
Step 1: Create an account
To start, users need to create a GRVT account and set up their password and two-factor authentication. Users must also complete the Know Your Customer (KYC) verification process and comply with Anti-Money Laundering (AML) regulations.
Step 2: Create a wallet
First-time wallet users can easily start with a default GRVT wallet with no complex setup required, such as having to manage your secret phrases. Instead this wallet thoughtfully allows users to access their private key via familiar security features like passwords and 2FA. GRVT doesn’t have access to your private key, ensuring you alone control your assets.
Users who already have an existing wallet such as Metamask or Ledger can simply connect their wallets to start trading.
Step 3: Transfer funds
After account setup, users can begin trading by depositing funds into their wallet, that is connected to GRVT. To start trading, they’ll need to transfer these funds to a trading sub-account.
The wallets are powered by smart contracts. At all times, users deposit their funds into a smart contract, which serves as a decentralized escrow and is secured by the users’ private keys. Only the users can access the funds and sign a transaction.
Step 4: Make a trade
Trading is powered by smart contracts and leverages an innovative combination of off-chain order matching with on-chain settlement. To buy or sell a perpetual contract, users will utilize their funds in the smart contract. To proceed, they will ‘sign’ the transaction with the private key.
Smart Contract Verification: Once the signed transaction is received, the smart contract checks its validity. If it’s valid, the smart contract executes the trade based on its rules and the exchange’s conditions.
Buyers: To buy a contract, the buyer submits quotes against a seller, and as the quote gets matched, the smart contract locks the appropriate amount of margin required to execute the contract.
Sellers: To sell, the seller submits quotes against a buyer, and as the quote gets matched, the funds will be received to the seller’s sub account which remains under the control of the seller’s private key.
Settlement and Liquidation: In derivatives trading, contracts eventually settle or liquidate. The smart contract automates these two outcomes based on pre-set rules, like if a trader’s position dips below the required margin.
dApp Sessions: When trading on-chain or engaging with decentralized applications (dApps), users typically have to sign every transaction. However, at GRVT, we offer a more convenient and secure way of interacting with the blockchain.
For trading, users can make multiple trades with a single signature for a defined period of time. This is achieved by allowing users to create something called a session key — a temporary key that grants access to perform trades for a limited period of time. With this session key, users don’t have to use their main key for every trade. Importantly, this session key is designed solely for executing trades and does not allow any deposits or withdrawals.
Trader Access Controls: An industry-first, this feature enables the use of multiple private keys to manage a single sub-account, each with customizable permissions. For instance, User #1 is authorized solely for depositing funds, User #2 can trade using those funds, and User #3 has permission to both trade and withdraw funds. This multi-layered access structure significantly enhances the security of the trading platform.
Self-custodial trading enables users to retain full control of their funds at every stage of the trading process. This not only reduces the need for a centralized custodian but also significantly bolsters security, granting users greater confidence and autonomy over their own assets.
Experience the future of crypto trading
GRVT’s mission is to create the next-generation digital asset platform to empower users to privately possess, transfer, and trade their assets.
GRVT closed alpha testnet goes live in November 2023, and the mainnet will officially launch in Q1 2024. To get involved and receive the latest updates, please join our community on X, Telegram, Discord, and Medium.
Always conduct your own research and select the exchange that best aligns with your trading requirements.
For a limited time, GRVT is offering an early-bird promotion. Enjoy discounted trading fees, trading coupons, and more. Visit GRVT.io for more details.