Smart Consolidation

Created by Muskan Bhandari, Modified on Thu, 4 Jan at 12:08 PM by Muskan Bhandari

⚡️ In this article:

1️⃣ Introduction

2️⃣ Smart Consolidation for Exchanges

3️⃣ Smart Consolidation vs Standard Consolidation

Introduction

Consolidation involves the automatic transferring of assets from a number of addresses in your deposit wallets and consolidating them into a single wallet.

With smart consolidation, we take this a step further by enabling multiple destinations, spillovers, the ability to configure a threshold, and gas fee control.

While all of our chains that have a deposit wallet support standard consolidation, EVM-based chains like Ethereum, Polygon and more support smart consolidation.

? Use Smart Consolidation to automatically...

Secure assets into cold storage.
Streamline withdrawals by directing funds into the withdrawal wallet.
Set multiple destinations to direct funds to.
Strike a balance between risk and convenience, by transferring the minimum required funds into a withdrawal wallet and the rest of it into cold wallets.

⚡️ Important Notes:

Smart consolidation only works on a deposit wallet.
Currently, only EVM chains support this feature.
The rest of the chains support standard consolidation which is to a single destination as per the pre-set rules.

Smart Consolidation for Exchanges

When an exchange receives user funds, it allocates a unique deposit address for each user.

Once funds are transferred, the exchange ensures its safety. To improve security, smart consolidation is employed.

It begins by examining active user deposit addresses with funds. Addresses exceeding a certain threshold value are identified, and their funds are automatically transferred from deposit wallets to withdrawal wallets and the majority of them to more secure cold wallets.

This strategy minimises deposit wallet vulnerabilities and guarantees timely withdrawals and enhances security.

Refer to the below diagram, to see how all of this works ⤵️

Smart Consolidation vs Standard Consolidation

The following table outlines the differences between standard consolidation and smart consolidation.

Feature	Smart Consolidation	Standard Consolidation
Destinations	Multiple	Single (Multiple with Code)
Spillover support	Yes	No
Configure Address thresholds	Yes	No (Default Values)
Control gas fees	Yes	No (Default Values)
UI based control	Yes	No
Supported Chains	EVM based	UTXO based, TRON, SOLANA, CARDANO