How Does the ‘Settlement’ Process Differ between a CEX and a DEX for an Option Contract?

On a CEX, settlement is centralized and guaranteed by the exchange's clearinghouse, which manages the transfer of funds and assets from the winner's account to the loser's account. On a DEX, settlement is automated and trustless, executed by a smart contract on the blockchain.

The contract automatically checks the conditions at expiration and distributes the collateral based on the outcome, eliminating the need for a central intermediary.