What Is Atomic Settlement and Why Is It Desirable for Crypto Derivatives?

Atomic settlement is the simultaneous and irreversible transfer of assets between two parties, typically facilitated by a smart contract on a blockchain. It ensures that either both legs of a transaction occur successfully, or neither does.

This eliminates the settlement risk (or principal risk) associated with one party fulfilling their obligation while the other defaults. It is highly desirable for crypto derivatives as it provides instantaneous finality without needing a trusted third-party custodian or clearing house.