Off Exchange Settlement
Unitas keeps collateral safe off-exchange while using CEX liquidity to run the delta-neutral engine that backs USDu and feeds yield to sUSDu. Off-Exchange Settlement (OES) links on-chain transparency with deep, efficient orderbooks.
How OES Works
1 Collateral Mapping
USDC, USDT, SOL, ETH, WBTC, etc. are deposited with OES custodians such as Copper or Ceffu. A 1-for-1 record is created inside the custodian; the coins remain in cold storage.
2 Hedging & Arbitrage
The mapped assets are borrowed from the custodian’s sub-account to open short perpetuals on CEXs, creating a market-neutral position:
long collateral + short perp ⇒ ≈ 0 delta + funding-rate carry.
3 Settlement & Rebalancing
Custodians batch-settle PnL flows, while Unitas re-hedge bots adjust short size (≈ hourly) to keep net exposure near zero and maximise fee / funding capture.
Advantages
Deep liquidity — large CEX books let USDu scale without DEX slippage ceilings.
Greater security — assets live in segregated MPC vaults; only signed instructions move.
Reg-friendly — Copper, Ceffu, etc., operate under robust compliance regimes.
Capital efficiency — on-chain mint/burn + off-exchange trading reduces gas and idle capital.
Risk Mitigation
Custodian failure
Collateral split across multiple OES providers with independent keys.
Exchange insolvency
Hedge caps per venue and scripts to migrate positions quickly.
Margin/liquidity stress
Real-time telemetry triggers auto-deleverage or top-up before thresholds.
Smart-contract bugs
Custodial records redeemable only by the core vault; code audited + bounty.
Transparent & Auditable
Unitas publishes a monthly Transparency Report listing all OES custodial balances and current hedge sizes. The docs site also shows the real-time balances of on-chain multisig vaults.
Why It Matters
OES keeps USDu fully collateralised and liquid while sUSDu holders capture:
75 % of JLP fee flow
Positive funding-rate arbitrage from perp shorts
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