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.
βTrades 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.
Updated about 1 month ago