Unveiling C3: A Revolution in Self-Custodial Exchanges

4 min readJan 4, 2024

Introduction

In the dynamic world of cryptocurrency trading, C3 emerges as a groundbreaking self-custodial exchange, seamlessly blending off-chain and on-chain components to deliver unparalleled performance, security, and user experience. This article provides a comprehensive technical overview of C3, delving into its innovative architecture, operational mechanisms, security features, and multi-chain capabilities.

Overview

C3 adopts a hybrid architecture, fusing off-chain and on-chain components to create a trading platform that mirrors traditional exchanges in terms of performance and accessibility. However, C3 maintains its trustless and non-custodial nature, ensuring users benefit from the security and autonomy intrinsic to self-custodial exchanges.

Compatibility and Accessibility

The on-chain component of C3 supports multiple signing algorithms and cryptographic curves, ensuring compatibility with various wallets and blockchain networks. This flexibility empowers users to custody their assets as per their preferences, enhancing the overall accessibility of the C3 platform.

How C3 Works

Architecture Components

C3’s architecture is structured into three layers: the access layer, the off-chain middleware component, and the on-chain component. Users interact with C3 through traditional APIs or the frontend, while the off-chain component handles trade processing and matching. The on-chain component manages trustless trade settlement and other verifications.

Off-Chain Component

C3’s off-chain component, hosting the Central Limit Order Book (CLOB), facilitates high-performance trading with features like instant order processing, low-latency execution, and scalability. The off-chain Risk Engine ensures validation of trade orders and other account operations, offering benefits such as privacy, advanced order types, and fee-free order posting and cancellation.

On-Chain Component

The on-chain component comprises two smart contract applications: the Cross-collateral Clearing Engine and the Health Calculator. These contracts, deployed on the Algorand blockchain, validate every matched trade, ensuring trustless and self-custodial operation. The Health Calculator serves as the on-chain risk engine, independently calculating account health using on-chain information.

Multi-Layered Security

C3 prioritizes security, boasting a multi-layered approach to safeguard user assets. The separation of the off-chain and on-chain components, coupled with the necessity for user signatures for all operations, ensures the system remains resilient against potential threats. Even in the event of a smart contract vulnerability, the attacker would require both the user’s key and the C3 settlement key for malicious operations.

Redundancies and Transparency

C3 incorporates redundancies to fortify security. While the off-chain component approves operations, the on-chain risk engine independently re-validates them, offering a double verification process. This redundancy minimizes the likelihood of malicious activities going undetected, ensuring a transparent and auditable system.

Seamless Interoperability

C3 embraces a natively multi-chain platform, allowing users to trade and deposit assets from various blockchains. The unified settlement layer, built on the Algorand blockchain, consolidates asset balances for efficient management and transparent trade settlements.

Wormhole Integration

C3 leverages Wormhole, a cross-chain interoperability protocol, to facilitate deposits and withdrawals from different blockchains. This protocol ensures secure and verifiable exchange of messages between blockchains, enhancing the overall interoperability of C3.

Algorand as the Settlement Layer

C3 relies on the Algorand blockchain for its on-chain component and trade settlement. Algorand’s low transaction costs, high throughput, and support for cryptographic primitives make it an ideal choice. The atomicity of Algorand is crucial for C3, enabling complex trade settlements to occur seamlessly.

Conclusion

C3’s revolutionary approach to self-custodial exchanges, with its hybrid architecture, multi-layered security, and multi-chain capabilities, positions it at the forefront of cryptocurrency trading platforms. By combining the best of both off-chain and on-chain worlds, C3 not only meets but exceeds the expectations of users, ushering in a new era of confident and secure cryptocurrency trading. As the crypto landscape evolves, C3 stands as a beacon of innovation, simplifying the path for market participants to engage with digital assets in a self-custodial and trustless manner.