Settlements
Last updated
Last updated
When Earn API is used to deposit and withdraw assets to accounts, no actual transfers are sent or received. Instead, all deposits and withdrawals per accounting cycle are netted and added to a per-currency outstanding balance.
The outstanding balance represents an unsettled balance that is expected to be sent or received as per the agreements for intervals on settlements (typically daily).
Furthermore, if the total amount to be settled is less than a minimum settlement threshold, the outstanding balance will remain 0, and no transactions will need to be done.
At midnight (Partners timezone) the current accounting cycle ends Tesseract will produce a settlement update based on the outstanding balance based on the following steps:
First, we calculate the accrued balances since last settlement:
Accrued payables = accrued deposits + accrued fees (what Partner is to pay to Tesseract).
Accrued receivables = accrued withdrawals + accrued partner margin (What Tesseract is to pay to the partner).
Then accrued payables and receivables are Netted by subtracting one from the other (accrued receivables - accrued payables).
If the netted balance is less than the minimum settlement amount then no settlement will be created and the outstanding balance will not be updated.
If the netted balance greater or equal to the minimum settlement amount, then a settlement will be created and the outstanding balance updated by adding the Netted payables and receivables to the outstanding balance.
Every day (or at regular intervals) the Partner and Tesseract both checks the outstanding balance per currency using the to determine if the partner is to send assets to the counter-party.
A positive balance means Tesseract will send capital to the partner, expect to have a certain amount send within the day. (Times may vary depending on how large the amounts are).
If the API returns a negative balance for a currency the partner is to send the given currency to Tesseract. When the transaction in the given currency is received by Tesseract the outstanding balance will be updated.
Since all deposits and withdrawals are batched, it means that only one transaction is needed to be exchanged per currency per day. This makes the exchange of assets predictable and less error-prone.
Save on fees. Since only one transaction is exchanged per day, the costs of network fees are smaller, combined with the fact that small amounts below the minimum settlement threshold will wait to be settled until later.
If too little or too much is sent from Partner to Tesseract, or visa-versa, then the outstanding balance will be updated accordingly and will be taken into account when the next settlement is processed.
The minimum settlement amount is used to ensure that small amounts is not settled. Typically the minimum settlement amount is set to a value equivalent to 1000 USD per currency but it may be updated dynamically if need be to suit specific needs.
The following terms are used when describe the day to day settlement process of the outstanding balance.
Outstanding balance: An amount per currency exposed by the API used to indicate who is to send money to each other. If the balance is negative the partner owes Tesseract and if the balance is positive Tesseract owes the partner.
Accrued payables: The amount per currency which the Partner is currently accruing to be paid to Tesseract when a new outstanding balance is calculated.
Accrued receivables: The amount per currency which the Partner is to receive from Tesseract when the outstanding balances is calculated.
Netted accrued payables and receivables: The netted accrued payables and receivables which is used to update the outstanding balance.