Currency exchange in Crassula

Overview

Crassula offers a flexible and dynamic approach to currency exchange by leveraging synthetic exchange mechanisms. This approach enables seamless exchanges across different providers while ensuring robust liquidity management.

Unlike traditional exchange models that require both currencies to be supported by the same provider, Crassula supports cross-provider currency exchange. This is made possible through synthetic exchange mechanisms and interledger transactions.

Key capabilities include:

Cross-provider currency exchange: Users can exchange between accounts of different providers.
Synthetic exchange model: Exchanges are executed even if both currencies are not held under the same provider.
Interledger transactions: Enable secure and traceable fund movement across providers.
Improved liquidity management: Reduces the load on real accounts by using pooling accounts.

Review the following articles for additional details on the solution's components:

Related pages

Crassula service providers

Key Concepts

Native vs. Synthetic Exchange

In a native model, exchanges occur directly between the user’s accounts. This requires a currency pair balance within the same provider.

In Crassula, synthetic exchange enables transactions even without matching balances or providers. The system uses intermediary steps and accounts to fulfill exchange requests.

Pooling accounts are used to temporarily hold funds.
Interledger transactions bridge different providers if necessary.
Exchanges can happen between virtual and real accounts across providers.

Exchange Rates and Calculation

R1 (Initial Rate): Market rate at transaction initiation.
R2 (Execution Rate): Market rate at transaction processing.
Client Rate: Final rate = R1 - markup %
Allowed Rate Deviation: ±2.5%. If exceeded, the exchange is declined.

Account and Transaction Types

End-user account: Account where an exchange is initiated and completed.
Pooling account: Used for intermediary fund storage.
Real/virtual accounts: See Real and Virtual Accounts.
Currency conversion transaction: Reflects the conversion logic.
Interledger transaction: Connects pooling and end-user accounts across providers.

How It Works

Step 1: User Initiates Exchange

User selects the currency and amount.
Crassula fetches the market rate from the FX provider.
Crassula calculates:
- Client Rate (with markup)
- Estimated fees
User reviews and confirms the exchange.

Step 2: Pre-order Processing

Market rate R1 is updated.
Client Rate and fees are recalculated.
Crassula creates:
- Currency conversion transaction (debit)
- Fee transaction (debit)
- Interledger transaction (if required)

Step 3: Order Creation

An exchange order is created but not executed until rate R2 is fetched.

Step 4: Rate Check

R2 is fetched.
System checks if 0.975 ≤ R2/R1 ≤ 1.025.
- If yes: Order proceeds.
- If no: Order is declined, and funds are released.

Step 5: Completing the Exchange

The order is executed on the FX provider’s side.
If needed, Crassula triggers an interledger transaction to finalize the process.

Flow of Funds

Refer to the diagrams below for detailed flows between:

Real accounts (same or different providers)
Virtual accounts
Real-to-virtual and virtual-to-real

These diagrams showcase how funds travel from end-user to the pooling account and back, depending on the exchange and account types involved.