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How Does Netting on a Blockchain Improve Capital Efficiency in Derivatives Trading?

Continuous, automated offsetting of mutual obligations reduces gross exposure and lowers required collateral, freeing up capital.
Greeks.Live08.11.25

How Does Netting on a Blockchain Improve Capital Efficiency in Derivatives Trading?

Netting is the process of offsetting mutual obligations to determine a single, final settlement amount. By recording all trades on a shared blockchain, netting can be performed continuously and automatically across all counterparties.

This reduces the total gross exposure and the collateral required to cover potential default. Lower collateral requirements mean less capital is tied up, significantly improving capital efficiency for market participants.

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