Solution Overview

use.com addresses the systemic failures of existing centralized exchanges through an integrated architecture built on five foundational pillars. Rather than treating performance, transparency, security, economics, and compliance as independent features, use.com integrates them into a cohesive system where each component reinforces the others.

The Five-Pillar Architecture

Pillar 1: Deterministic Trading Core

Objective: Deliver fair, fast, and predictable execution under all market conditions.

use.com employs a symbol-sharded matching engine where each trading pair operates as an independent instance, enabling horizontal scaling without cross-symbol contention. This architecture delivers:

• Matching latency (p99): < 800 microseconds

• API latency (p99): < 15 milliseconds globally

• Throughput: 100,000+ orders per second per shard

• Uptime: > 99.95% monthly

Every state change is recorded as an immutable event in an append-only log, enabling complete auditability and deterministic replay for recovery scenarios. Order matching follows strict price-time priority with no preferential routing or hidden order types.

Circuit breakers automatically pause trading when price deviations exceed thresholds (5% for BTC/ETH, 10% for major alts), protecting against erroneous execution while maintaining transparency about trigger conditions.

Pillar 2: Transparent Risk Mathematics

Objective: Enable traders to independently calculate and verify all risk parameters.

All liquidation formulas, margin requirements, and insurance fund mechanics are published with version control. Traders can calculate their exact liquidation price before entering positions:

Liquidation Price Formula:

For long positions: $Liquidation_{Long} = Entry \times \left(1 - \frac{MMR}{1 + Leverage}\right)$

For short positions: $Liquidation_{Short} = Entry \times \left(1 + \frac{MMR}{1 + Leverage}\right)$

Where MMR (Maintenance Margin Requirement) is publicly disclosed for each asset and risk tier.

Liquidation Ladder System: Positions are liquidated in phases (25%, 25%, 50%) rather than all at once, reducing market impact and giving positions a chance to recover. Auto-deleveraging (ADL) priority is calculated transparently as:

$ADL\_Priority = Profit\_Percentage \times Leverage$

Insurance Fund Transparency: Real-time dashboard shows current balance, coverage ratio (target > 5% of open interest), 24-hour inflows/outflows, and historical trends. Alert thresholds trigger enhanced risk controls when coverage falls below targets.

Pillar 3: Security-First Custody

Objective: Eliminate single points of failure in key management and asset custody.

use.com implements Multi-Party Computation (MPC) combined with Hardware Security Modules (HSM) for key management. Private keys are split into shares distributed across 5 geographic locations, requiring 3-of-5 shares for any transaction. This architecture ensures that compromising the system requires simultaneous physical access to multiple locations and HSMs—effectively impossible.

Wallet Segregation:

• Cold Storage (70-80%): Offline vaults with quarterly rebalancing

• Warm Wallets (15-25%): Batched withdrawal processing

• Hot Wallets (2-5%): Instant operations with velocity limits

• Operational Wallets: Completely separate from user funds

Proof-of-Reserves: Quarterly attestations by independent auditors verify:

$\sum OnChain\_Reserves \geq \sum User\_Liabilities + Operational\_Buffer$

Users receive Merkle proofs enabling cryptographic verification that their balance is included in the liability calculation without revealing other users' data. Target reserve ratio: ≥ 105%.

Pillar 4: Revenue-Linked Tokenomics

Objective: Align token value with platform success through disciplined, deflationary economics.

use.com's token economics are tied directly to platform success through quarterly buyback-and-burn:

Burn Formula: $Burn_t = \min\left(\frac{0.20 \times NetProfit_t}{VWAP_t}, CirculatingSupply_t\right)$

Example: With $10M quarterly profit and $0.50 token price, use.com burns 4 million tokens ($2M ÷ $0.50). This continues until supply reduces from 200M to 100M tokens (50% reduction), creating predictable deflationary pressure as revenue scales.

Supply Trajectory:

• Year 1: +15M unlocks, -8M burns = +7M net (+3.5%)

• Year 2: +12M unlocks, -15M burns = -3M net (-1.5%)

• Year 3: +8M unlocks, -22M burns = -14M net (-7%)

Token Utility: Fee discounts (up to 50%), collateral haircut reduction (25% bonus), governance voting weight (up to 2× with time-locks), and VIP tier acceleration.

Pillar 5: Compliance-Native Design

Objective: Integrate regulatory requirements at the architectural level.

Tiered KYC Framework:

• Tier 1 (Lite): Email verification, $1,000 daily limit, spot trading only

• Tier 2 (Standard): ID + selfie, $50,000 daily limit, spot + margin

• Tier 3 (Enhanced): Proof of address + source of funds, unlimited, all products

• Tier 4 (Institutional): Enhanced due diligence, dedicated support

Products are gated by jurisdiction and user tier, ensuring compliance with local regulations. For example, perpetual futures are only accessible to users in jurisdictions where use.com holds appropriate licenses and the user has completed required verification.

Travel Rule Compliance: For transfers > $1,000, use.com exchanges IVMS101 data with counterparty exchanges, ensuring compliance with FATF recommendations while maintaining user privacy.

Integration and Synergies

The five pillars reinforce each other:

• Event logs enable risk formula verification

• Proof-of-reserves validates risk calculations

• Secure custody enables reliable token burns

• Compliant operations generate sustainable revenue

• Transparent operations ease regulatory licensing

Measurable Outcomes

use.com commits to achieving and maintaining:

Performance: Matching latency < 800 µs (p99), API latency < 15 ms (p99), uptime > 99.95%

Transparency: 100% formula publication, real-time insurance fund updates, quarterly proof-of-reserves

Security: Reserve ratio > 105%, hot wallet exposure < 5%, incident response < 15 minutes

Economics: 20% of net profit burned quarterly, 50% supply reduction over 5-7 years

Compliance: KYC completion < 24 hours, 100% travel rule compliance, zero regulatory actions

Conclusion

The use.com solution is not a collection of features—it's an integrated system designed from first principles to address the fundamental failures of existing centralized exchanges. By combining deterministic trading, transparent risk, secure custody, aligned tokenomics, and native compliance, use.com aims to set a new standard for cryptocurrency infrastructure.

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Related Sections:

• Product Architecture Overview

• Risk Engine & Liquidation System

• Wallet Infrastructure & Custody Model