Capital Markets
Multilateral Netting
Cross-product net settlement across derivatives, repo, and DEX block trades — without becoming a CCP. Gross flows that scale as N(N−1)/2 collapse to N net flows. Bilateral ISDA relationships preserved; settlement efficiency without legal restructuring or clearing-house authorization.
Key figures
How it works
From gross bilateral to net multilateral, in one block.
Cross-product position matrix inside a TEE
A counterparty owes $2M on a TRS, is owed $1.5M on a repo, and has $300K of unsettled DEX block trades against the same name. The Netting Enclave sees all gross positions across products simultaneously — the only system positioned to do so — and computes a single net obligation.
Derivatives MTM from the Derivatives Product Enclave, repo exposure from the Repo Product Enclave, DEX settlement obligations from the matching engine. Positions remain confidential outside the Netting Enclave; only aggregate net amounts publish on-chain.
No novation. Each pair's ISDA Master and repo confirmations remain the legal counterparty relationship. The netting computation is execution efficiency, not legal restructuring — which is why it does not require CCP authorization.
Atomic batch, ZK-proven correctness
At cycle close, the Netting Enclave produces a settlement batch — one net payment per participant. The CollateralPool debits and credits balances atomically; the SP1 Netting Correctness proof attests that net payables sum to zero without revealing any bilateral position.
Row-sum of the gross position matrix produces the net vector. The Netting Correctness proof attests row-sum equivalence and zero-sum (no assets created or destroyed) without revealing individual positions or net amounts.
NetPositionManager Contract executes the settlement batch via Settlement Rails in a single atomic L2 transaction. Every participant's CollateralPool balance updates simultaneously. Default isolation: a single participant default does not affect others.
Capabilities
CCP-grade compression without CCP authorization.
No novation, no CCP license
The Netting Enclave computes; it never becomes counterparty to any trade. Bilateral ISDA Masters remain the governing legal relationship. Avoids CFTC DCO / EMIR / MAS Approved Clearing House authorization while replicating CCP-grade settlement efficiency.
Cross-product netting
Derivatives MTM, repo exposure, and DEX settlement obligations net against each other simultaneously. A long copper TRS and a short copper-backed repo offset within the same net amount, dramatically reducing required collateral.
Real-time provisional net
Each participant queries their current provisional net position via authenticated Indexer at any time during the cycle. Pre-funding net payables and managing exposure becomes a continuous decision, not a cycle-end scramble.
Stress-tested overcollateralization
Each participant maintains collateral covering their Stress Net Payable — net obligation under defined stress scenarios (parallel shifts in commodity prices, FX, TFI). Replaces a CCP guaranty fund with protocol-enforced overcollateralization.
Default isolation
A single participant default triggers close-out netting only for their book. Other participants' bilateral relationships continue uninterrupted through the next cycle. No socialized losses, no waterfall exposure to peer failures.
TEE-confidential gross positions
Gross bilateral positions remain visible only to each pair. The Netting Enclave inside Phala TDX TEE is the only system with simultaneous visibility to compute the matrix; positions never leave the enclave in plaintext.
Comparison
Bilateral vs. CCP vs. Caviar
| Bilateral OTC | CCP | Caviar | |
|---|---|---|---|
| Settlement | Gross bilateral, T+1/T+2 | Net via novation | Net without novation, 1 L2 block |
| Authorization | None beyond ISDA | DCO / EMIR / ACH license | CMS scope only |
| Counterparty risk | Bilateral exposure to each peer | Concentrated in CCP | Bilateral preserved, no concentration |
| Position confidentiality | Counterparty-only | Visible to CCP | TEE-confidential, ZK-aggregated |
Use cases
Real-world applications
20-counterparty institutional pool
A pool of 20 institutional dealers transacting bilaterally generates 190 gross flows per cycle. Multilateral netting compresses to 20 net flows — a >89% reduction in settlement transactions and proportional collateral savings.
Cross-product hedge book
A commodity trading desk with offsetting Cu derivatives, Cu warehouse repo, and Cu-perp DEX exposures sees its three gross obligations net to a single small position. Collateral requirement drops by ~70% versus per-product netting.
Treasury operational efficiency
Asset manager with diversified positions across 10 Caviar counterparties pre-funds one net amount per cycle instead of reconciling 10 bilateral settlements. Operational headcount on settlement reduced; payment failure surface area collapsed to a single cycle.
CCP-grade efficiency, bilateral legal structure.
Net settlement across derivatives, repo, and DEX. ZK-proven correctness, TEE-confidential positions, no clearing-house authorization required.