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What is an Escrow?
About Exchange Escrows
Once your User Escrow is confirmed on the blockchain, you can ask the exchange to fund an Exchange Escrow for you. The Exchange Escrow is funded by the exchange and proves that the exchange has sufficient collateral to back any trades you make on the exchange. It also protects you if the exchange becomes unresponsive or has been hacked.
To open an exchange escrow, you have to pay the exchange an escrow fee. This compensates the exchange because the exchange is locking up its coins for you. The escrow fee is proportional to the number of coins and expiry time of the exchange escrow. If you close your exchange escrow early, before it expires, you will receive a rebate of a portion of your escrow fee. Learn more about escrow fee pricing here.
We suggest closing exchange escrows before they expire. This ensures the best protection for your coins in case the exchange is hacked or goes offline. If you forget to close an exchange escrow before it expires, an exchange operating normally will close the escrow for you. However, if the exchange is hacked you'll need to carefully follow our recovery procedure to claim your coins.
Setting up an Exchange Escrow
For this example we'll use an LTC/BTC trading pair (buy LTC with BTC).
Exchange Escrows must have at least one corresponding User Escrow on the same exchange.
Next, input the coin you want to buy, the amount of that coin to escrow, and the expiration date of the escrow.
Then enter a wallet address where you want to deposit your purchased coins when escrow closes.
Finally, you will pay the escrow fee, which comes out of your User Escrow.
After you continue, you'll verify amount in escrow, expiry date/time, and deposit address for purchased LTC.
The escrow fee is paid out of the coins locked in User Escrow. Here the escrow fee is 0.00008735 BTC, and being paid from your BTC User Escrow that was set up first. If we close the exchange escrow before it expires at 9:45 AM on Jan 19, 2019, then we will get a rebate of a portion of the escrow fee.
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