Does a Decentralized Exchange (DEX) Futures Platform Have a Clearing House Equivalent?
A decentralized exchange (DEX) futures platform typically replaces the traditional clearing house with a smart contract or a pool of collateral. This automated, trustless system performs the functions of margin management, liquidation, and settlement.
The smart contract acts as the central counterparty, enforcing the rules of the derivative contract without human intermediaries.
Glossar
Decentralized Exchange
Exchange ⎊ A decentralized exchange (DEX) facilitates peer-to-peer cryptocurrency trading without intermediaries, operating autonomously on blockchain networks.
Futures Platform
Platform ⎊ This refers to the technological infrastructure, often exchange-based or a dedicated clearing system, designed for the standardized trading and lifecycle management of forward contracts on digital assets.
Traditional Clearing House
Function ⎊ A traditional clearing house acts as a central counterparty (CCP) in financial markets, standing between buyers and sellers to guarantee the performance of trades.
Smart Contract
Code ⎊ The contract is fundamentally self-executing code deployed on a distributed ledger, embodying the terms of the agreement in an immutable format.
Decentralized Exchange (DEX)
Platform ⎊ A Decentralized Exchange, or DEX, represents a non-custodial trading platform built upon smart contracts, enabling peer-to-peer exchange of cryptocurrencies and derivatives without requiring a central intermediary to hold user funds.
Clearing House
Role ⎊ The Clearing House acts as a central counterparty (CCP) in traditional and centralized crypto derivatives markets, interposing itself between buyers and sellers to guarantee the performance of the contract.