How Does the Blockchain’s Transaction Finality Affect the Settlement Process?
Blockchain transaction finality, the point at which a transaction is confirmed and irreversible, provides certainty for the physical settlement of crypto options. Once the underlying cryptocurrency transfer is finalized on the blockchain, the settlement is complete and guaranteed.
This certainty is a key advantage for physically settled crypto derivatives.
Glossar
Network Congestion
Latency ⎊ Network congestion within cryptocurrency, options trading, and financial derivatives manifests as increased latency, directly impacting execution speeds and potentially leading to adverse selection against slower participants.
Physical Settlement
Delivery ⎊ The concept of physical settlement, particularly within cryptocurrency derivatives and options, signifies the actual transfer of the underlying asset ⎊ be it a digital token or a commodity ⎊ rather than a cash-based offset.
Cryptocurrency Transfer
Transfer ⎊ A cryptocurrency transfer denotes the movement of digital assets from one wallet address to another, representing a fundamental operation within blockchain networks and a critical component of derivative strategies.