Centralized exchanges play a major role in derivatives trading, but they introduce counterparty risk that cannot be ignored. When assets are deposited directly onto an exchange, users give up custody and depend on the exchange’s internal controls, balance sheet integrity and risk management.

The collapse of FTX in 2022 showed the consequences of centralized exchange risk. FTX was once one of the largest crypto platforms in the world, with over a million users, but it suddenly became insolvent after a market downturn revealed deep financial mismanagement. Investigations showed that FTX had transferred customer deposits to its affiliated trading firm, Alameda Research, without users’ knowledge. Alameda used those assets to make risky investments and cover losses. Much of Alameda's balance sheet was concentrated in FTT, the FTX native token, which lacked independent market value outside the exchange and it was used as collateral for loans. When the true state of Alameda’s holdings became known, the value of FTT collapsed and customers rushed to withdraw funds. FTX was unable to meet withdrawal requests, froze customer access and ultimately filed for bankruptcy, leaving billions of dollars of customer funds stuck in the bankruptcy process for years.

For protocols that rely on centralized exchanges to execute trading strategies, this introduces a critical design question. How can exposure to exchange liquidity be maintained without transferring custody or underwriting full counterparty risk?

This question is particularly important for delta-neutral strategies, where capital efficiency and uninterrupted execution are required, but capital preservation is paramount.

Yield strategies built around perpetual futures rely on continuous access to derivatives markets. Funding rate payments, position rebalancing and margin maintenance all require reliable exchange execution.

If assets are custodied directly on an exchange, any failure of that platform creates an immediate and total risk to capital. Even if the strategy itself is sound, counterparty failure alone can result in a loss.

For a yield-bearing stablecoin protocol like Aegis, this risk is unacceptable. A delta-neutral system designed to produce stable returns must be insulated from potential exchange failures. This is where off-exchange settlement becomes foundational rather than optional.

Several infrastructure providers now offer off-exchange settlement frameworks designed to separate custody from execution. The three most relevant to institutional crypto trading are Copper, Ceffu and Fireblocks.

Copper's ClearLoop enables clients to trade on supported exchanges while keeping assets in Copper controlled custody. Funds remain in segregated accounts, and trading exposure is mirrored to exchanges via a controlled credit framework.

Settlement occurs through predefined reconciliation cycles, reducing direct counterparty exposure while preserving execution efficiency. Aegis uses ClearLoop alongside institutional trading desks and custodians to access exchange liquidity without transferring asset custody.

CEFFU offers an off-exchange model built around asset mirroring. Assets are held in segregated custody while corresponding balances are reflected on connected exchanges.

MirrorX supports active trading with periodic settlement, while MirrorRSV emphasizes on onchain verification and segregated custody. Ceffu’s architecture is closely integrated with Binance infrastructure and is primarily used by institutional clients operating within that ecosystem.

Fireblocks provides an off-exchange model built on MPC controlled vaults. Assets remain in Fireblocks custody while mirrored exposure is granted to exchanges through controlled settlement channels. Fireblocks emphasizes real-time risk controls, policy enforcement and integration across multiple exchanges and custodians.

Each of these systems addresses counterparty risk in different ways, but the common objective is the same: preserving asset custody while enabling active trading.

Aegis integrates off-exchange settlement through Copper ClearLoop as part of our core infrastructure.

YUSD backing collateral is held with Copper in segregated custody. When Aegis deploys capital to execute its delta-neutral strategy, positions are mirrored onto supported exchanges (currently OKX and Bybit) through ClearLoop rather than transferring assets directly onto exchange wallets.

For BTC exposure, Aegis uses BTC-M perpetual contracts, which allow hedging without centralized stablecoin counterparty exposure. These positions are opened against mirrored collateral while the underlying BTC remains under custodial protection.

This setup enables several critical properties:

• Custody separation: Assets remain under third-party custody and are never deposited onto the exchange.

• Operational continuity: Positions can be managed without moving funds between wallets.

• Risk containment: Exchange failure does not automatically imply loss of collateral.

We publish transparency data showing custodial balances, hedge exposure and system status. Custodian attestations provide additional verification that assets held off-exchange correspond to deployed positions.

The purpose of off-exchange settlement within the Aegis model is not complexity for its own sake. It is a safeguard designed to support sustainable low volatility yield.

By combining delta-neutral strategies with institutional custody and verifiable settlement, Aegis reduces reliance on any single exchange while preserving the ability to generate funding rate revenue. This architecture allows the protocol to earn yield without exposing users to the same risks that have historically affected centralized exchanges.

As Aegis continues to expand its infrastructure, off-exchange settlement remains a foundational component of its risk framework. It enables the protocol to operate with institutional risk management while remaining accessible onchain.

This approach reflects Aegis’ broader design philosophy: prioritizing capital protection, transparency and resilience over short-term yield maximization.

Centralized exchanges play a major role in derivatives trading, but they introduce counterparty risk that cannot be ignored. When assets are deposited directly onto an exchange, users give up custody and depend on the exchange’s internal controls, balance sheet integrity and risk management.

The collapse of FTX in 2022 showed the consequences of centralized exchange risk. FTX was once one of the largest crypto platforms in the world, with over a million users, but it suddenly became insolvent after a market downturn revealed deep financial mismanagement. Investigations showed that FTX had transferred customer deposits to its affiliated trading firm, Alameda Research, without users’ knowledge. Alameda used those assets to make risky investments and cover losses. Much of Alameda's balance sheet was concentrated in FTT, the FTX native token, which lacked independent market value outside the exchange and it was used as collateral for loans. When the true state of Alameda’s holdings became known, the value of FTT collapsed and customers rushed to withdraw funds. FTX was unable to meet withdrawal requests, froze customer access and ultimately filed for bankruptcy, leaving billions of dollars of customer funds stuck in the bankruptcy process for years.

For protocols that rely on centralized exchanges to execute trading strategies, this introduces a critical design question. How can exposure to exchange liquidity be maintained without transferring custody or underwriting full counterparty risk?

This question is particularly important for delta-neutral strategies, where capital efficiency and uninterrupted execution are required, but capital preservation is paramount.

Yield strategies built around perpetual futures rely on continuous access to derivatives markets. Funding rate payments, position rebalancing and margin maintenance all require reliable exchange execution.

If assets are custodied directly on an exchange, any failure of that platform creates an immediate and total risk to capital. Even if the strategy itself is sound, counterparty failure alone can result in a loss.

For a yield-bearing stablecoin protocol like Aegis, this risk is unacceptable. A delta-neutral system designed to produce stable returns must be insulated from potential exchange failures. This is where off-exchange settlement becomes foundational rather than optional.

Several infrastructure providers now offer off-exchange settlement frameworks designed to separate custody from execution. The three most relevant to institutional crypto trading are Copper, Ceffu and Fireblocks.

Copper's ClearLoop enables clients to trade on supported exchanges while keeping assets in Copper controlled custody. Funds remain in segregated accounts, and trading exposure is mirrored to exchanges via a controlled credit framework.

Settlement occurs through predefined reconciliation cycles, reducing direct counterparty exposure while preserving execution efficiency. Aegis uses ClearLoop alongside institutional trading desks and custodians to access exchange liquidity without transferring asset custody.

CEFFU offers an off-exchange model built around asset mirroring. Assets are held in segregated custody while corresponding balances are reflected on connected exchanges.

MirrorX supports active trading with periodic settlement, while MirrorRSV emphasizes on onchain verification and segregated custody. Ceffu’s architecture is closely integrated with Binance infrastructure and is primarily used by institutional clients operating within that ecosystem.

Fireblocks provides an off-exchange model built on MPC controlled vaults. Assets remain in Fireblocks custody while mirrored exposure is granted to exchanges through controlled settlement channels. Fireblocks emphasizes real-time risk controls, policy enforcement and integration across multiple exchanges and custodians.

Each of these systems addresses counterparty risk in different ways, but the common objective is the same: preserving asset custody while enabling active trading.

Aegis integrates off-exchange settlement through Copper ClearLoop as part of our core infrastructure.

YUSD backing collateral is held with Copper in segregated custody. When Aegis deploys capital to execute its delta-neutral strategy, positions are mirrored onto supported exchanges (currently OKX and Bybit) through ClearLoop rather than transferring assets directly onto exchange wallets.

For BTC exposure, Aegis uses BTC-M perpetual contracts, which allow hedging without centralized stablecoin counterparty exposure. These positions are opened against mirrored collateral while the underlying BTC remains under custodial protection.

This setup enables several critical properties:

• Custody separation: Assets remain under third-party custody and are never deposited onto the exchange.

• Operational continuity: Positions can be managed without moving funds between wallets.

• Risk containment: Exchange failure does not automatically imply loss of collateral.

We publish transparency data showing custodial balances, hedge exposure and system status. Custodian attestations provide additional verification that assets held off-exchange correspond to deployed positions.

The purpose of off-exchange settlement within the Aegis model is not complexity for its own sake. It is a safeguard designed to support sustainable low volatility yield.

By combining delta-neutral strategies with institutional custody and verifiable settlement, Aegis reduces reliance on any single exchange while preserving the ability to generate funding rate revenue. This architecture allows the protocol to earn yield without exposing users to the same risks that have historically affected centralized exchanges.

As Aegis continues to expand its infrastructure, off-exchange settlement remains a foundational component of its risk framework. It enables the protocol to operate with institutional risk management while remaining accessible onchain.

This approach reflects Aegis’ broader design philosophy: prioritizing capital protection, transparency and resilience over short-term yield maximization.