Exponential’s safety-first approach to DeFi investing
By Driss Benamour, Mehdi Lebbar, and Greg Jizmagian, Co-founders
Published Jan 11, 2024
Exponential is on a mission to make decentralized finance (DeFi) more accessible, and that starts with safe and secure transactions. Our investment product offers users easy access to DeFi yield opportunities while ensuring paramount security, transparency, and compliance. In this blog post, we'll break down how we’re keeping customer funds safe, the rationale behind our choices, and why Exponential is the most seamless and secure investment experience for crypto holders who want to earn yield on their assets.

The DeFi advantage

Exponential built its platform on DeFi for transparency and reliability. Unlike traditional finance, where yield is generated by blindingly trusting individuals or institutions, DeFi operates on the principle of trustlessness – meaning that you don't have to trust any intermediary to transact on your behalf. Protocols are built to be neutral and permissionless with transaction terms hard-coded into the contract and executed automatically.
DeFi’s open nature ensures transparency – all transactions are recorded and verifiable on the blockchain. This trustless infrastructure is the backbone of Exponential’s investment product, providing users with a source of yield they can track and rely on. Here are three things that make our platform the safest and easiest way to invest in DeFi.

Trading expertise: mitigated risks and reduced costs

Exponential takes care of the complex aspects of crypto and DeFi, including the signing process on the chain, to ensure a seamless experience for our users. Errors in crypto and DeFi can lead to irreversible consequences, so we take on the risk for our users to keep their funds safe from start to finish. We use our own funds during transactions, so user funds are not at risk while trades are being processed.
To keep trading costs down, Exponential aggregates user trades into a single on-chain transaction. This pooled approach allows us to distribute fees across many users, resulting in lower costs compared to individual trading on Ethereum. All transactions remain visible on-chain, ensuring transparency. Once trades are completed, user funds are moved to cold storage with top-level security.

Custody: robust architecture for fund security

Your funds are yours, period. All customer assets are held 1:1 and you can withdraw at any time. Exponential never repurposes client funds and never mixes them with company assets. Unlike traditional institutions, we don't lend or take any action with your assets without your explicit instruction. This means that funds are available to our customers 24/7, year-round.
We take fund security extremely seriously. To help keep your funds safe, we use multi-party computation (MPC) technology to ensure no one can access anyone's funds without your permission. MPC also guarantees redundancy and fund recovery, even if a party disappears. For an extra layer of security, we store pool tokens in cold storage with strong built-in controls. Exponential's servers have a unique architecture across multiple clouds, adding an extra layer of security. Transactions are initiated, signed, and monitored across different clouds. The initiating server only acts upon user requests, guaranteeing that all transactions performed are user-driven. This ensures users are in full control of their funds since any transaction requires a user order.

Compliance: upholding the rule of law

As a US-based company registered with FinCEN, Exponential proactively embraces compliance for long-term success. Transparency, trust, and adherence to rules are our guiding principles. While a compliant approach may be more challenging, it aligns with our commitment to the best interests of our users.
FinCEN registration, along with AML and KYC regulation compliance, ensure user investments are legal and secure. This approach facilitates smooth estate transitions and provides peace of mind for both individual and institutional investors. Institutional investors particularly appreciate our identity verification process for large fund withdrawals.
At Exponential, we are not just providing an investment product; we are shaping the future of decentralized finance. Our user-centric approach, combined with the highest standards of security, transparency, and compliance, set us apart in the rapidly evolving crypto landscape. Join us on this journey towards a more accessible, secure, and user-friendly DeFi experience.