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How Does a Decentralized Exchange (DEX) Manage Counterparty Risk Using Smart Contracts?

Smart contracts act as trustless escrow, holding collateral and automating trade execution to remove counterparty risk.
Greeks.Live17.11.25

How Does a Decentralized Exchange (DEX) Manage Counterparty Risk Using Smart Contracts?

A DEX eliminates counterparty risk by using smart contracts to hold collateral and automatically execute trades and settlements. The contract acts as a trustless escrow, ensuring that if one party fulfills their side of the trade (e.g. depositing collateral), the other party is obligated to perform, or the contract automatically liquidates.

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