# Off-Exchange Settlement (OES) in Unitas

Unitas uses Off-Exchange Settlement to combine on-chain transparency with the deep liquidity of top centralized exchanges (CEXs). By routing collateral through custodians such as **Copper** and **Ceffu**, the protocol can hedge USDu with delta-neutral shorts while keeping user assets in segregated cold storage.

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### How OES Works

| Phase                        | What Happens                                                                                                                                                                         |
| ---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| **1 Collateral Mapping**     | Onchain collateral: USDC, USDT, SOL, ETH, WBTC, etc; is deposited into Copper / Ceffu. The custodian credits a 1:1 balance inside its vault system; the coins remain offline.        |
| **2 Delta-Neutral Hedging**  | Using the mapped collateral, Unitas opens short perpetual futures positions on selected CEXs. The pair “long spot + short perp” neutralises price risk and earns funding-rate yield. |
| **3 Settlement & Liquidity** | Custodians batch-settle PnL and margin flows, while Unitas bots rebalance hedge sizes (≈ hourly) to keep net exposure near zero and ensure ample liquidity for USDu redemption.      |

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### Advantages

1. **Access to Deep Liquidity** – CEX orderbooks support larger hedge sizes, letting USDu scale without DEX slippage limitations.
2. **Lower Counterparty Risk** – Assets stay in multilateral-MPC vaults; only signed instructions leave the custodian.
3. **Capital Efficiency** – Off-exchange margining reduces on-chain gas costs and idle collateral.
4. **Regulatory Alignment** – Copper, Ceffu and peers run under robust compliance regimes, easing institutional onboarding.

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### Transparency & Security

* **Monthly Transparency Report** – A blog post and CSV break down OES balances, hedge sizes and Insurance Fund totals.
* **Real-time Multisig Dashboards** – Vault addresses are displayed in the [Docs](https://docs.unitas.so/mainnet-program-and-address-index) and on the [Transparency Dashboard](https://app.unitas.so/dashboard/transparency). Anyone can verify balances on Solana at any time.
* **Independent Audits & Bug Bounty** – All core contracts are audited and covered by a standing bounty.
* **Redundant Oracles & Risk Engine** – Chainlink + Pyth feeds with fallback logic; bots auto-deleverage or top-up margin before risk thresholds.
* **Real-time Proof of Solvency** - Unitas has launched a [PoS dashboard](https://accountable.unitas.so/) in collaboration with Accountable.
* **Third Party Reserves Reports**: Independent weekly USDu collateral reports by ht digital are visible on the [Transparency Dashboard](https://app.unitas.so/dashboard/transparency).

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### Why It Matters

Off-Exchange Settlement lets **USDu** stay fully collateralised and liquid, while **sUSDu** holders capture JLP fee flow and positive funding rates, without leaving collateral on centralized exchange's hot wallets. By blending decentralized accounting with centralized liquidity, Unitas delivers a secure, scalable foundation for stable, yield-bearing dollars and global payments.


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