1 min. read
How Resolv Uses Fireblocks Off Exchange to Minimize Stakeholder Risk
Benefits at a glance
Connectivity
Provide connectivity to leading exchanges without compromising on counterparty risk or transparency
Resolv is the protocol behind USR, a stablecoin backed by ETH and derivatives, and the Resolv Liquidity Pool (RLP), a second-tranche token that serves as an insurance layer for USR. Its delta-neutral architecture balances staked Ether and futures positions to hedge price exposure while maintaining capital efficiency. Resolv utilizes Fireblocks Off Exchange to connect USR with leading centralized exchanges (such as Deribit) without compromising on counterparty risk or transparency.
About Resolv
Since early 2023, Resolv has been focusing on creating a transparent and stable instrument, backed by digital assets and designed to deliver crypto-native money market yields to its users.
USR was built with the central idea of creating a stablecoin that benefits from digital asset backing, enabling more transparency and lower latency of operations as compared to tokens backed by U.S. Treasury securities, or other forms of “real-world” financial instruments. Users of Resolv can mint and redeem USR in exchange for other digital assets, and stake USR to receive yield generated by the collateral pool. USR is overcollateralized. Holders of USR are protected from risk events by Resolv Liquidity Pool (RLP), a token representing an excess portion of the collateral pool backing USR.
The Challenge: Transparency and Low Counterparty risk in a Centralized Liquidity Context
Resolv employs a delta-neutral strategy for its collateral pool. Typically, such strategies are executed on centralized exchanges and traders bear credit exposure to these venues. Furthermore, accurate reporting and transparency are compromised since the portfolio state is not directly auditable on the blockchain level.
Therefore, Resolv’s challenge was to mitigate counterparty risk and combine transparency with the benefits of the deep liquidity accessible via centralized venues.
The Solution: Integrating with Fireblocks Off Exchange
While designing Resolv, the team came to the conclusion that keeping margin outside of exchanges would minimize counterparty risk.
With Fireblocks Off Exchange, this became a real possibility. For Resolv’s stakeholders, it is vital to maintain minimum exposure to third parties, so integrating Off Exchange was essential when structuring the collateral pool.
Fireblocks Off Exchange truly enables institutions like Resolv to mitigate counterparty risk while trading on centralized exchanges. Fireblocks Off Exchange leverages MPC technology to enable traders to allocate and mirror assets directly to an exchange from a mutually-controlled wallet, protecting their principal from hacks, bankruptcy, and fraud, while providing centralized exchanges with complete on-chain transparency that client accounts are fully collateralized.
Since incorporating Off Exchange with Resolv’s collateral pool, the team has gone live on Deribit, one of the largest derivatives venues in the market, as well as several decentralized exchanges operating on L2 blockchains. They also plan to use MPC wallets powered by Fireblocks to transfer assets between parts of the collateral pool.
What we especially love about the solution provided by Fireblocks is that the assets are held in a single-purpose blockchain wallet dedicated to Resolv, and its assets can be audited in real time, contributing to overall transparency of the stablecoin.
With Fireblocks, Resolv has been able to deliver the best of two worlds to the users. It benefits from connectivity with leading centralized exchanges, but does not compromise on counterparty risk and transparency.
