Definition ∞ Trustless trading is the exchange of digital assets directly between participants without requiring a centralized third party to hold funds or guarantee the transaction. This form of trading relies on cryptographic proofs and smart contracts to ensure atomic swaps and secure settlement. It eliminates counterparty risk associated with intermediaries.
Context ∞ Trustless trading is a foundational concept in decentralized finance, offering users greater autonomy and reducing reliance on centralized exchanges. While it addresses security concerns related to custodial services, it often presents challenges in terms of liquidity, speed, and user experience compared to traditional platforms. The ongoing development of decentralized exchange protocols aims to improve these aspects.
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