Definition ∞ DvP Finality, or Delivery versus Payment Finality, ensures that the transfer of an asset occurs only if the corresponding payment is simultaneously made. This principle is critical in financial markets to eliminate principal risk, meaning neither party is exposed to the risk of delivering an asset without receiving payment, or vice versa. In the context of digital assets, blockchain technology can natively provide DvP finality through atomic swaps or smart contracts, where the exchange of assets and payments is executed as a single, indivisible transaction. This reduces settlement risk significantly.
Context ∞ The discussion surrounding DvP finality is highly relevant in the evolution of digital market infrastructures, particularly concerning the settlement of tokenized securities and central bank digital currencies. A key debate involves how to achieve true DvP finality across different blockchain networks or between traditional and digital systems. Future developments include cross-chain interoperability solutions and standardized protocols for atomic settlement to enhance efficiency and reduce risk in global financial transactions.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
