How Does the Absence of a Centralized Clearing House Affect the Counterparty Risk of Tokenized Options?

The absence of a centralized clearing house in tokenized options means that counterparty risk is managed directly by the smart contract. Instead of a trusted intermediary guaranteeing the trade, the contract uses over-collateralization and margin requirements locked on-chain to ensure the fulfillment of obligations.

The risk shifts from a traditional counterparty default risk to a smart contract execution risk and a liquidation risk, as the system relies on the code and the sufficiency of the locked collateral.