Crypto traders often face a difficult choice. Do they trade on a decentralized exchange (DEX), where asset-choice is limited, where UIs are unintuitive, and where slippage and liquidity concerns can destroy the potential profits of a trade? Or do they do the unspeakable and surrender custody of their crypto to a centralized exchange (CEX) so that they can access features like advanced charting, broad asset pools and interoperable trading?
Maroon’s New Solution to Custody Risk
Maroon offers a new path. A middle way. Quite simply, why not both? Why can’t users retain custody of their crypto while enjoying all the benefits a CEX provides? Why can’t they trade with institutional insurance, and institutional tools, whilst at the same time always remaining verifiably in control of their crypto?
This is what Maroon offers. Its innovative hybrid exchange gives users all the fluidity of a traditional finance UI when trading their crypto while storing user funds in multisig wallets that means should anything go wrong, they never lose their funds. This is the solution the nascent crypto industry has been crying out for.
As more institutions onboard brokerage accounts and pension schemes and asset baskets containing crypto, the need for watertight custody has never been more acute. Individuals who have for so long suffered, sometimes brutally, at the hands of malfeasant centralized exchanges will finally have a way to access fluid orderbooks and matching engines with zero custodial or settlement risk for their funds.
How Maroon Segregated Wallet Works
Here’s how it works. Maroon users using Maroon wallets retain a secret key, or key-shard, to their own segregated wallet. The Maroon exchange can never take ownership or transfer their funds without their explicit approval. Users' funds are always SAFU, because user funds are never fully controlled by Maroon in the first place.
It’s far cry from the typical practices we see utilized by major exchanges. Exchanges like Binance and Crypto.com and the now-dead FTX have to date used ‘Omnibus wallets’. Giant crypto wallets with every user's funds stashed together and used as a slush fund for any activity the CEX wants to engage in. God forbid a hacker gets access to a private key, or that the private key for such a wallet is somehow lost by the central exchange. In such an event, all user’s funds can be vanished instantly, bankrupting all traders who use it.
This is not acceptable. These kinds of custody risks may have been okay when crypto was just beginning and people were happy to have trading services to begin with. But in 2024, after legions of custody failures that drove crypto into winter after winter, it’s no longer acceptable. Maroon wants to show other CEXs how it should be done. Maroon wants to give users a way to verify that an exchange - their exchange - has the funds for all their liabilities, no matter what happens. By storing user funds in bespoke, verifiable, multisig wallets that only a user can authorize through provision of their private key, that’s exactly what they can do.
Maroon’s Off-Chain Order Matching
So how does it work? How does Maroon offer fast throughput CEX-like trading with options, leverage, charting and more while using decentralized user-owned wallets for their architecture? Here’s how.
When a user initiates a trade, they sign a transaction with their Maroon private key. This is the only way to ever move funds in and out of a given wallet. The other key signer is the exchange itself, which auto-signs any transaction made using a user's private key. Users can also pre-sign transactions ahead of time with their private key, meaning limit orders and stop loss orders can be pre-scheduled so that when a strike price is met the trade executes instantly.
Orders are processed by Maroon’s proprietary off-chain order matching engine that can process 84 million transactions per second. Once a transaction is signed, the order is matched with a counterparty, including the exchange itself, and the swap is made between the wallets. Custody only leaves a user at the very instant of the trade, before being restored immediately. It’s the fastest non-custodial way to trade, and sidesteps many of the problems that afflict DEXs.
Effortless CEX Experience
On Maroon, users can effortlessly trade multi-chain whilst keeping control of their crypto at all times. On maroon, users enjoy full regulatory protections for their activities. Maroon fully insures all crypto held on the exchange so that in the vanishingly small likelihood of an error occuring doing order matching or if somehow the exchange fails, their crypto is protected. Users can at any time request verification of the funds held in the multisig wallets.
It makes sense, obviously, it’s their wallet. Maroon also has multiple redundancy and protective modules to keep crypto safe. Including a ‘dead-man switch’ if a user is inactive for a long period, automatically returning crypto to a given external wallet, or the ability to set up a guardian ring of fellow signees who can recover your crypto if necessary. Maroon is VASP-licensed, fully insured, and audited by top crypto technology companies. It will also offer total fiat integration on ramps and off ramps that also adhere to all jurisdictional requirements where they operate.
Building a New Trust in Crypto
For Maroon, it’s all about restoring trust in crypto. It’s about creating the conditions for this emerging industry to truly come out of the shadows and shine on the global financial stage. A way of making good on crypto’s central ethos, a new era of financial self-sovereignty powered by the open and global borders of shared innovation and collective industry. About creating a financial system that anyone, everywhere, can tap into and enjoy the fruits of.
And it’s simple. It’s not ‘don’t be evil’ it’s ‘can’t be evil’. There is no need for any trading service to take total custody of the user's funds. There is no need to say ‘trust me bro.’ You have to earn trust by doing the right things. Maroon is doing the right things. If you want to keep hold of your crypto, but take advantage of all the features a CEX can provide, then Maroon’s innovative Hybrid CEX is the solution you - and everybody else in the world - has been waiting for.
