Does a DEX Have a Clearinghouse Function? ⎊ Path

Does a DEX Have a Clearinghouse Function?

A DEX, particularly one offering derivatives, performs the function of a clearinghouse but in a decentralized, algorithmic manner. The smart contract and the underlying liquidity pool act as the central counterparty, holding collateral and guaranteeing the execution of the trade.

The risk management is handled by the contract's coded logic rather than a centralized entity's risk team.

How Is the Holding Period Affected by Rolling over a Futures Contract?

Define ‘Liquidity Pool’ in the Context of Decentralized Exchanges (DEXs)

What Is the Role of the ‘Clearing House’ in Guaranteeing Derivatives Settlement?

In a Tokenized Option, What Specific Mechanism Replaces the Traditional Clearinghouse?

How Does Smart Contract Execution on a Blockchain Potentially Achieve a Form of “Instant Novation”?

How Is Impermanent Loss Calculated in a Simple Two-Token Pool?

How Is the Interest Rate for a Stablecoin Determined in a Decentralized Lending Pool?

How Does a Central Clearinghouse Reduce Counterparty Risk in Exchange-Traded Derivatives?