Can someone explain to me how does the Ethena’s off-exchange settlement work? It says that the asset is not deposited on a centralized exchange at all and only uses an “off-exchange settlement” mechanism.

views are my own, protocol @ eigen labs; prev working on decentralization @ gitcoin, llama, stanford medicine.

building @so many products • prev. @everyname (acq) @nethermind @proximacapital @consensysacad • thomphreys.com

curious how does liquidation work for this off-exchange settlement mechanism.

Off-exchange settlement is a product of Fireblocks. Some exchanges have an agreement with Fireblocks to deposit user funds in their custody rather than on exchanges. So ethena trades pk exchanges based on their collateral on a fireblocks vault.

Ethena employs non-US custody services like Copper, Ceffu, + Fireblocks to safeguard digital assets. These entities handle the secure holding of assets, offloading the custodial responsibilities from Ethena. This setup enhances risk management + enables efficient asset managmnt by ensuring safety + operational agility.