General Use Case
How to use Virtual Accounts
Introducing the Crypto Exchange Use Case
A crypto Exchange is a web application where end-users can trade their crypto assets. The Owner of the Exchange is the one who owns the private keys to all of the user's crypto assets - in this case, we are talking about a Custodial Exchange leveraging a Custodial Wallet.
Trades are not performed on the blockchain (on-chain), as this would be slow and expensive. All the trades are virtual transactions between end-user accounts (off-chain).
Exchange Workflow
Step 1: Setting up the application
Includes prerequisites like blockchain wallet creation and creating exchange service accounts for gathering fees.
Step 2: Registration of new end-users in the application
The steps that need to be executed when new users register in the exchange
Step 3: End-user application journey
What kind of actions end-users can take while in the application
Step 4: Trading
Enabling end-users to trade their assets
Step 5: Observe Security Basics
Additional information is available in the following article.
Good to Know
- A custodial wallet is a wallet where a third party holds the private keys, not the crypto assets owner. The provider has full control over crypto assets, while end Users only have permission to send or receive payments.
- Every Exchange must have wallets for every crypto asset it supports.
- Every end-user of the Exchange must obtain accounts for every asset they are trading.
- The exchange operator defines the trading pairs that can be traded by users and usually charges a fee for every trade performed.
Virtual Accounts can only handle one (1) single currency per Virtual Account.
Disclaimer
- The Tatum Virtual Accounts Use Case is based on a Custodial Exchange, where the user ("you") holds the PrivateKeys and Mnemonics on behalf of their end-users.
- You are expected to hold 1:1 asset liquidity between the VA off-chain ledger and your end-users on-chain assets.
- Tatum does not hold Mnemonics and or PrivateKeys. Additional information is available in the following article.
- Virtual Accounts are designed to hold a limited number of deposit addresses (1-5), similar to standard practices in Exchanges. While adding many deposit addresses may appear functional, this setup often leads to unrecoverable synchronization issues across users over time.
To avoid potential disruptions and ensure consistent performance, we recommend adhering to the intended usage of 1-5 deposit addresses per Virtual Account.
Updated 10 days ago