How Does the Concept of ‘Delivery versus Payment’ (DvP) Function on a Blockchain?

DvP is a settlement mechanism ensuring that the final transfer of securities only occurs if the corresponding transfer of cash (or other assets) occurs simultaneously. On a blockchain, this is achieved through an atomic swap implemented via a smart contract.

The contract locks both the asset and the payment tokens, releasing them to the respective counterparties only when both sides of the transaction are confirmed, guaranteeing the principle of DvP.