With the launch of Dex 3.0 comes the introduction of hot wallet storage for use in portal accounts. There are a variety of reasons for the switch including faster transactions, fewer transaction errors and more. This update was pushed along with a number of other important changes to the Dex portal adding functionality and stability. This article will explain the what, why, and how of hot wallets and demonstrate their importance in the Dropil system.
What are hot wallets?
A hot wallet system is a system in which all user funds are stored in a group of wallets in order to take advantage of the many benefits of a hot wallet system. Hot wallets allow Dropil to easily manage all user funds in a small number of wallets. One example of hot wallet implementation that most users are familiar with is exchanges. Most major exchanges utilize hot wallets to lower costs associated with transactions and improve transaction speed. This method of fund storage and management is the same type of wallet system that Binance, Coinbase, and many other exchanges use.
How hot wallets work
When a user deposits funds to their portal wallet, they will be moved to one of Dropil’s hot wallets shortly after and the user’s balance will be increased internally. When a user withdrawals from the platform, the funds they withdraw will be withdrawn from one of Dropil’s hot wallets and the user’s balance will be decreased internally.
Why the switch to hot wallets?
A major advantage of a hot wallet system is allowing withdrawals from the portal to be immediately processed, usually within seconds. In addition, with the new feature allowing users to select a fee to pay on withdrawals, users may opt-in to receive their funds almost instantly for a small fee – all thanks to the hot wallet system. In addition to improved transaction times, the hot wallet system cuts gas costs for Dropil by nearly 90%.
Hot wallet security
In regards to security, Dropil takes every possible step, and more, to ensure that our users and their funds are entirely secure at all times. We take security very seriously and treat it as a number one priority at all times. Rest assured that we have many security measures and practices in place to prevent loss or theft of any user funds or data.