How Can Atomic Settlement Be Applied to an Options Contract Exercise?
For a physically-settled option, an atomic settlement mechanism can be used to ensure the simultaneous exchange of the underlying asset for the strike price (cash). For a cash-settled option, the smart contract calculates the final payout based on an oracle price and atomically transfers the required cash equivalent between the counterparties, guaranteeing that the exercise is fulfilled instantly and correctly.
Glossar
Atomic Swaps
Efficiency ⎊ These peer-to-peer exchanges facilitate the direct exchange of one cryptocurrency for another without relying on a centralized custodian or intermediary.
Block Finality Impact
Consequence ⎊ The certainty of a block's finality directly dictates the operational risk profile for any on-chain derivatives settlement or large-scale crypto transaction.
Atomic Settlement
Execution ⎊ Atomic settlement, within cryptocurrency and derivatives, signifies the conditional transfer of assets ⎊ typically digital ⎊ contingent upon simultaneous fulfillment of pre-defined conditions.
Atomic Settlement Mechanism
Mechanism ⎊ An Atomic Settlement Mechanism (ASM) represents a paradigm shift in transaction finality, particularly relevant within decentralized finance (DeFi) and sustainable tokenized assets.
Simultaneous Exchange
Mechanism ⎊ Simultaneous Exchange, within cryptocurrency and derivatives, denotes the concurrent execution of offsetting transactions, typically across different venues or counterparties, designed to capitalize on fleeting arbitrage opportunities or manage counterparty risk.