Exchange-Self Custody and MPC Wallets – Figure Markets

This content is for informational purposes only and does not constitute financial advice.

What is Self-Custody?

When dealing with blockchain assets, every account is secured by a unique “private key”—a secret code that allows you to access and control your funds.

When interacting with blockchain assets, assets need to be held on a blockchain account. There is a unique, non-changing private key that is used to control assets in each account.

Here are the most common solutions:

Hosted wallets: A 3rd party, such as an exchange, holds the keys and controls the account on behalf of their user. The user authenticates to the 3rd party through email/password or something of that nature, then the 3rd party acts as an authorized proxy to enable transfers and trades. While this is simple for the user, there are circumstances where the 3rd party becomes unavailable (bankruptcy) or maliciously moves user assets without their consent.

Self-custody wallets: The account holder controls the private keys and signs for transactions on their own. The individual can back up their private key as a multi-word seed phrase, also known as a mnemonic. The benefit to this approach is the account holder is the only party able to move assets out of their account, as they are the ones with sole signing authority. There are a few variants of self-custody wallets, including software wallets and hardware wallets.

Software wallets include mobile applications, desktop programs, or browser extensions. These wallets are able to store your private key and use them to transfer assets at your command. They can be combined with other forms of security such as a password or biometric authentication to keep your account secure.

Hardware wallets are devices with the sole purpose of holding your private key. The benefit of hardware wallets is the ‘air-gapped’ nature, meaning they are not internet connected, and are less susceptible to hacks when disconnected from your internet-connected device.

Your Wallet at Figure Markets

When you join Figure Markets via our app, you receive a self-custody wallet.

You are in control: Only you can authorize transactions.

Backup is essential: Safeguard your seed phrase (a 12–24-word secret) in a secure place. Without it, you cannot access your wallet.

Why Self-Custody?

Self-custody means true ownership. Your assets are yours, free from the risks of third-party intermediaries.

What is MPC and why do we need it?

Multi-Party Computation (MPC) is a cryptographic technology that allows multiple parties to jointly compute a function using their individual inputs, ensuring those inputs remain private. In the context of Figure Markets, MPC plays a crucial role in enabling secure and efficient trading of assets from multiple blockchains.

The Need for MPC in Cross-Blockchain Trading

At Figure Markets, accounts operate on the Provenance Blockchain, which supports native assets like HASH. However, the diverse digital asset ecosystem means users often want to trade assets from other blockchains, such as Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and USDC.

These assets are usually tied to their respective Level 1 (L1) blockchains, which can create challenges for trading:

High Fees: Transferring assets on L1 blockchains often incurs significant transaction fees.

Slow Settlement: L1 transactions can take minutes or longer to settle, slowing the trading experience.

Security Risks: Centralized systems that custody user assets have historically suffered from misuse or mismanagement, as seen in cases like FTX and Celsius.

Figure Markets overcomes these challenges by leveraging MPC to create a secure, decentralized framework for cross-blockchain asset trading.

How MPC Powers Figure Markets

When users deposit assets from L1 blockchains into Figure Markets, the assets are secured in an MPC account.

Here’s how it works:

MPC Account Control: Each MPC account is associated with a private key, but that key is never fully available to any single party. Instead, it is split into subportions (or “shares”) and distributed among multiple MPC hosts.

Secure Custody: The underlying assets remain locked in the MPC account. Users are granted entitlements to these assets, which they can trade on Figure Markets.

Controlled Withdrawals: When a user wishes to withdraw the original assets, multiple MPC hosts must collaborate to reconstruct the private key and authorize the transaction. This ensures no single host can misuse the assets.

Key Benefits of MPC for Figure Markets Users

Decentralized Security: With no single point of control, the system is highly resistant to breaches or misuse by any one party.

Fast and Cost-Efficient Trading: By trading entitlements instead of performing L1 blockchain transfers, users avoid high fees and enjoy near-instant settlement on the Provenance Blockchain.

Enhanced Asset Protection: Unlike centralized custodians, Figure Markets’ dMPC implementation ensures user assets are protected against unauthorized use, aligning with the highest standards of security and trust.

Protecting Users Against Historical Failures

The decentralized nature of MPC directly addresses the risks posed by past failures in centralized systems. For example, FTX and Celsius misused customer assets without consent, leading to catastrophic losses. MPC eliminates this risk by requiring multi-party agreement for any movement of assets, ensuring transparency and accountability.

With Figure Markets, depositing assets like BTC, ETH, and SOL is more than just a convenience—it’s a commitment to secure, efficient, and fair trading. Every deposit benefits from the robust security of decentralized MPC, with no additional fees or effort required from users. It’s just one of the many ways Figure Markets ensures your assets are safe while delivering a superior trading experience.

Read more in the Figure Markets MPC Whitepaper.

This content is for informational purposes only and does not constitute legal or financial advice. This communication is not an offer to lend, extend credit, sell nor a solicitation of an offer to buy securities, tokens, or any digital assets.

Investing in cryptocurrencies involves significant risks. Cryptocurrency trading is not available in NY. Please click here for risk disclosures on investing and trading in cryptocurrencies.

Figure Payments Corporation offers self-directed investors and traders cryptocurrency services. It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. Figure Payments Corporation's NMLS ID number is 2033432, and is located at 100 West Liberty Street, Suite 600, Reno, NV., 89501. You can verify Figure Payments licensing status at the NMLS Consumer Access website. Click here for Figure Crypto's state license and regulatory disclosures.

Products and services are available through Figure Markets a brand name of Figure Markets Holdings, Inc. Both Figure Payments Corporation and Figure Markets Holdings, Inc. are wholly owned subsidiaries of Figure Technology Solutions, Inc.

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