How Does the Concept of Economic Finality Influence the Settlement Risk in Crypto Derivatives?

Economic finality drastically reduces settlement risk because it provides near-certainty that a transaction, once finalized, will not be reversed. In derivatives trading, settlement risk is the risk that a counterparty will fail to deliver the asset or payment.

For crypto derivatives, finality ensures the underlying asset's price and ownership are immutable, making the settlement process more secure and reducing the need for high collateral requirements.