Cube.Exchange Official Litepaper

Our mission is to inspire confidence in crypto - one trade, one user, and one innovation at a time.

Introduction

Fewer tradeoffs, more trades.

Our mission is to inspire confidence in crypto - one trade, one user, and one innovation at a time.

Cube.Exchange believes traders seek an exchange where they can confidently find security, transparency, and speed. We provide these key factors using a revolutionary fusion of the best from traditional finance and blockchain.

When opting for more traditionally structured Web2 platforms, traders find themselves surrendering custody of their digital assets to the exchange in return for higher liquidity, speed, precision in matching, and accessibility. This handover of control of digital assets to an exchange represents a severe drawback, with traders concerned about proper exchange security measures and a lack of transparency around digital asset reserves. These concerns often are why traders prioritize self-custody of digital assets and venture into the Web3 realm.

With Web3 trading platforms, traders face another set of risks arising from the regulatory flux and uncertainty around decentralized finance. These Web3 platforms often have less user-friendly interfaces, limited liquidity, or added trader responsibilities, such as securely managing their private keys for self-custody.

In addition, both Web2 and Web3 structured exchanges have been plagued by bad actors and bad decision-making, dramatically damaging user trust in the crypto ecosystem. Thus far, rug pulls, hacks, reckless speculation, high-level corruption, and acting outside the bounds of regulation have been commonplace.

Now, by combining deep roots in traditional finance with cutting-edge Web3 innovations, Cube.Exchange offers the advanced trading platform that traders have been seeking. At Cube.Exchange, traders find a regulatory-compliant platform for traders of all types and sizes. Traders are no longer required to compromise between asset security and institutional-grade trading experience. Cube.Exchange is the synthesis of innovative blockchain technology and dedication to trader empowerment, setting the standard for a new paradigm in crypto trading.

Overview

Ready to trade.

We took the core crypto value proposition of non-custodial wallets and the lessons from the dramatic failures of past exchanges. We combined that with knowledge from traditional finance markets to create an advanced solution for mitigating current systemic risks with both Web2 and Web3 trading platforms.

Whether you're a seasoned trader, a retail enthusiast, or an institution navigating the digital asset revolution, Cube.Exchange is tailored to meet your priorities and needs. Here, you can pursue your desired trading objectives without giving up control of your digital assets and compromising on essential aspects such as speed, accessibility, or regulatory compliance.

Our pioneering technology is engineered to protect users from bankruptcy or insolvency resulting from misappropriation, re-hypothecation, or cyber-attacks – ensuring your funds cannot be co-mingled with anyone else's, including those owned by Cube.Exchange. This comprehensive protection against external security breaches and internal vulnerabilities is made possible through multi-party computation (MPC) vaults that keep user funds within their control and ownership. A Guardian network of trusted third parties verifies the legitimacy of non-standard withdrawal requests and validates the proper net settlement of all assets. In straightforward terms: Cube.Exchange does not touch and cannot unilaterally move your assets.

Key Features

Trading without compromise.

Powered by best-in-class technology that protects users from founder risk, Cube.Exchange ensures your digital assets are always under your control while matching the performance of TradFi and introducing a comprehensive trader-focused UI into the exchange itself.

Our design combines key elements of older exchanges that traders desire. In particular, the accessibility and efficiency of Web2 structured venues and the user self-determination of Web3 platforms. This is accomplished by a separation of concerns – an exchange layer facilitates trading, and a settlement layer processes the resulting settlements. Ultimately, your digital assets always remain in your ownership and control.

Superior Speed

The exchange layer uses best-in-class Web2 technology for its central matching engine, programmatic market connectivity, web UIs, account management and recovery, KYC/AML processes, multi-chain support, and other crucial front-end features. Our design balances developer and trader ergonomics with a focus on latency and performance to deliver a best-in-class trading experience that tests 40x faster than the industry standard, giving users confidence that their orders will be filled under a millisecond.

Enhanced Safety

The net settlement calculation of Cube.Exchange will be independently validated by the Guardian network and then settles the net transfer of funds. Trades are settled on-chain, using secure multi-party computation, commonly known as “MPC”. Cube.Exchange only supports the matching and settlement of trades and can never unilaterally direct the movement of funds. The use of MPC technology enables non-custodial ownership of funds in a user’s MPC Vault and protects user assets from exchange bankruptcy, misuse, or “bank-run” issues that many exchanges have faced in the past. Users will be able to withdraw assets at any time from their MPC Vaults because the assets will be owned and controlled by them, subject to the settlement of ongoing orders.

Similarly, to withdraw funds, you have to authenticate yourself, select the asset and destination address, and submit the withdrawal order, which is then validated and published to the settlement layers.

Cube Client Account

To interact with the Cube.Exchange, you first need to sign-in with an OAuth provider. We currently support Google and Apple but will extend that list based on user feedback. After a sign-in, Cube.Exchange will create a “Cube Client Account” for you.

Why are we not providing a standard email / password authentication? Using an OAuth provider allows Cube.Exchange to minimize the amount of sensitive information managed by the platform, providing a layer of security.

MPC Vault

Once you create your “Cube Client Account”, you initiate a distributed key generation to securely generate the private key material that constitutes ownership of your “MPC Vault.” This allows the common derivation of one or more segregated non-custodial digital wallets for each native blockchain (“MPC Wallet(s)”). Your MPC Vault is a collection of all your MPC Wallets. For example, you may have a BTC MPC Wallet, an ETH MPC Wallet, and a SOL MPC Wallet, all within your MPC Vault. The distributed key generation process involves you – the User, Cube.Exchange, and an independent network of trusted third parties – the Guardians. You will receive a PDF document containing your share of the distributed key material protected by a two-of-three signature threshold. The distributed key material helps ensure your funds are safe as its shares are used to support settlements on the exchange.

Our MPC Vault design aligns perfectly with our mission statement about inspiring confidence in crypto.You can be confident that you own and control your digital assets within your MPC Vault. We also determined to make our non-custodial MPC Vault zero-fee to all and we do not require users to trade on Cube.Exchange to access and use their MPC Vault. This advances Cube’s philosophy of technology innovation that advances user empowerment of their financial freedom.

KYC/AML

Once you finish setting up your MPC Vault, to fully interact with the exchange, you need to be cleared by Cube’s KYC/AML onboarding diligence processes. You will not be permitted to deposit any digital assets in your MPC Vault and trade until this is completed. Once the onboarding diligence is successfully completed, your “Cube Client Account” is fully active. You may then deposit digital assets in your MPC Vault and access all the traditional exchange features including order submission, API keys, client account management and recovery, etc.

Deposits, Trading, and Withdrawals

Once you have created your MPC Vault, your public addresses on each native blockchain are known. To trade on Cube.Exchange, you first must authenticate yourself, select the market of interest, create a new order, and submit it to the central matching engine. To create a new order, you must first transfer digital assets to the respective MPC Wallet within your MPC Vault. The new order is checked for various parameters including position limits and other protections. As soon as your order has been matched through the central limit order book, the bona fide matched transaction result is published to the settlement layer known as CubeNet, a meta-L2 blockchain. Importantly, your balance on Cube.Exchange immediately reflects the result of the matching and does not wait for the settlement to complete. Similarly, to withdraw funds you have to authenticate yourself, select the asset and destination address, and submit the withdrawal order, which is then validated and published to the settlement layer.

Settlement

On a chain-specific basis, the settlement layer calculates the net settlements resulting from some or all the trades and withdrawal orders in the prior period. Cube Exchange is actively developing advanced settlement criteria to increase settlement speed, including factors such as block time, fee pricing, outstanding net deltas, etc. As soon as the Guardians confirm the calculation by Cube.Exchange, a Threshold Signature Scheme (TSS) is initiated over the participating wallets to transfer the funds directly between users’ wallets appropriate to the net settlement and chains. Once the transaction signature shares are completed, the settlement layer submits the transactions to the blockchain. Retries may be necessary for some blockchains depending on fee price fluctuations and block-by-block load. If you wish to accelerate this periodic settlement, you can easily do so at the cost of paying the underlying blockchain fees directly.

Non-Response to Client Request

Cube.Exchange will roll out a novel withdrawal process that will not require action by Cube.Exchange to execute. If the settlement layer has not processed a net settlement in 48 hours, the Guardians may independently support the user in transferring funds out of their MPC Vault. This will require the user to provide their key share to the Guardians as well. Depending on the reason for the settlement halting, all the user’s unsettled matched trades may be considered “busted,” which means the matches will be unwound. Non-responsiveness may occur during force majeure events such as natural disasters or in the case of a user account being frozen by Cube.Exchange.

Freezing a Cube Client Account

Cube.Exchange may limit/restrict the withdrawal function for a Cube Client Account at any time in the event of identified illicit activity such as sanctions violations, exposure to high-risk wallets, exposure to wallets previously identified to be belonging to terrorist financing, and whenever it finds that the activity may be above the platform’s risk tolerance. If their Cube Client Account is limited/restricted, the user may not create new orders on Cube.Exchange, including withdrawal orders, and all their pending orders will be canceled. Cube.Exchange will publish to the Guardians the grounds for limiting/restricting the Cube Client Account. The Guardians will not act on any withdrawal orders from the user as well. This would result in the user having its assets “frozen” in their MPC Vault, which is the desired outcome from a regulator’s perspective for not allowing transactions that are illicit or high-risk in nature. The user whose activity is limited/restricted would be able to appeal to the relevant authorities to have any restrictions lifted. Just as with a safe deposit box at a bank, the user maintains full ownership of their assets within their MPC Vault.

Recovery of Lost Key Share for MPC Wallet

Cube.Exchange aims to provide a mechanism for the recovery of lost keys for users. When ready the feature is ready, the user must report that their key share is lost or stolen, which may require additional verification outside of the normal authentication process (for example KYC documents). If the key share was stolen, Cube.Exchange will immediate publish this information to the Guardians so they do not process any transactions involving the affected MPC Wallet(s). To reconfirm their identity, the user will be required to undergo an identity verification process, like the one used during their onboarding. As a result of that process (which includes ID verification), Cube.Exchange will publish the results to the Guardians and the user. Assuming a positive verification, in the case of a lost key share, a new key share will be generated. In the case of a stolen key share, a new MPC Wallet will be created, and new key shares will be distributed to the user, Cube.Exchange, and the Guardians. Finally, the user’s digital assets will move from the prior MPC Wallet to the new MPC Wallet.

The Guardians

The Guardians are trusted third parties serving as an independent verification and trust mechanism, minimizing the risk of fraudulent or incorrect transactions while bearing limited liability. They are involved in the Cube.Exchange transaction authorization process, which prevents any single entity, including the exchange itself, from unilaterally manipulating or misusing user funds. This multi-party involvement helps maintain a transparent and accountable process, reinforcing the platform's integrity. Adding an extra level of protection, the Guardians facilitate direct communication and withdrawals in case of exchange failure. This proactive measure mitigates the risk of financial loss or lock-in.

Cube believes it is important to prioritize well-established and trusted entities within the blockchain or financial industry with a proven track record of reliability and security to fulfill the Guardian role.

Potential Guardian candidates include:

• Validators and Validators-as-a-Service Providers (VaaS) with a strong reputation within the industry, and a history of operating nodes, participating in consensus mechanisms, and ensuring the integrity of blockchain networks.
• Well-established technology companies with expertise in blockchain technology, cybersecurity, and infrastructure management.
• Trusted financial institutions, such as banks or investment firms, with robust security measures in place, accustomed to safeguarding customer funds and maintaining regulatory compliance.
• Deeply engaged and reputable Cube community representatives selected through a transparent voting or nomination process.

There are several incentives associated with serving as a Guardian, including:

• Guardian fees
  Net settlement will occur at a minimum once a day. At net settlement, each Guardian earns a pro-rata portion of five percent (5%) of the net transaction fees with a minimum guaranteed monthly amount. This financial incentive aligns the interests of the Guardians with the success and growth of Cube.Exchange, motivating them to contribute their expertise and resources.
• Reputation and Prestige
  Taking on the role of a Guardian enhances the reputation and prestige of the participating entity or individual. Being recognized as a trusted Guardian in a reputable blockchain platform like Cube.Exchange attracts attention and credibility within the blockchain and financial industries. This reputation boost can lead to additional business opportunities, partnerships, and industry recognition.
• Network Effects and Business Development
  Acting as a Guardian offers networking opportunities and business development prospects. Interacting with other participants in the Cube ecosystem, such as other Guardians, developers, and investors, fosters collaborations, partnerships, and business synergies. These connections and interactions can lead to valuable relationships that benefit the participating entity or individual.
• Alignment with Core Principles
  Becoming a Guardian allows entities or individuals to actively participate in promoting and upholding the core principles and values of Cube.Exchange. Those who strongly align with concepts such as self-sovereignty, security, and trust in providing a reliable platform for users can contribute to the ecosystem's growth while staying true to their beliefs.

Advancing Interface

Cube.Exchange gives you the ability to effortlessly connect to the exchange and craft tailored tools on top of it. This innovative feature ensures a unique and enhanced trading experience that allows for unmatched adaptability. Powerful and customizable, Cube.Exchange APIs cater to beginner and advanced developers looking for more versatility and comfort – whether it comes to trading, analyzing data, or creating trading strategies.

By introducing a comprehensive trader-focused UI into the exchange itself, we prioritize user-centric design that features:

• Depth-chart trading
  Enter and cancel orders precisely from the depth-chart UI.
• Equalizer
  Experience unmatched transparency and easily pinpoint your order's position in the execution queue. Modify your order while preserving its spot, ensuring no disruptions to your trading momentum.
• Concise trade history
  Stay focused with persistent activity logs within the trading interface.
• Advanced order entry
  Enter orders visually and trade market movements with ease.
• Rich API and order-flow integrations
  Integrate with market-by-price or market-by-order feeds for maximized market insight.

Genesis Story

Security beyond the exchange.

Following a strong background in traditional finance, Cube.Exchange founder, Bartosz Lipiński was inspired by developments such as Automated Market Makers and new market structures available in Web3. He also saw the potential for significant improvement in digital asset exchanges in terms of performance, scalability, security, and accessibility. Following an esteemed career as a key builder in the Solana ecosystem, Bartosz joined forces with Lawrence Wu, now Cube.Exchange CTO.

We are excited to work closely with our partners to grow the Guardian Network and look forward to collaborating with ambassador-owned platforms seeking to adopt Cube’s technology.

Summary

Speed. Safety. Extensibility.

We are on a mission to inspire confidence in crypto – one trade, one user, and one innovation at a time.

As financial markets transition to a new future, the name “Cube” embodies three fundamental principles that steer our vision of leading the way by pioneering industry-changing solutions.

Three principles for the three dimensions of a cube:

1. Speed (x)
Delivering traditional finance (TradFi) execution speed to foster institutional-grade trading experiences on our platform.

2. Security (y)
Upholding the integrity of your digital asset ownership, ensuring your assets remain unequivocally yours.

3.Transparency(z)
Authenticating the history and validity of transactions without compromising privacy.

About Cube

Cube.Exchange is a trading platform fusing the best of TradFi and blockchain technologies. The founding team includes traditional and digital asset finance veterans with a vision to create a regulatory-compliant venue for traders of all types and sizes. Cube is powered by best-in-class technology that protects users from founder risk while changing how they interact with their assets and providing an institutional quality trading experience for traders of all types.

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Disclaimer
Not financial or tax advice. This Litepaper is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This Litepaper is not tax advice. The overall Crypto space is still developing and there are risks involved in engaging with them. Talk to your accountant. Do your own research.