Settlement Upon Payment
Immediate finalization of transactions upon initiation in digital systems.
What is Settlement Upon Payment?
Settlement upon payment occurs when funds are transferred and cleared instantly, as in blockchain-based stablecoin transactions like USDC on Visa’s platform. In CBDCs like e-CNY, this feature ensures real-time value transfer without intermediaries, reducing counterparty risks.
For digital assets, it enables efficient cross-border settlements, cutting times from days to seconds and costs by up to 50%, as demonstrated in projects like mBridge. This contrasts with traditional systems where settlement lags payment, potentially leading to disputes or liquidity issues.
Related Terms
Transfer Bitcoin and Transaction
A Bitcoin transaction is a digitally signed transfer of digital assets (BTC) between addresses on the bitcoin blockchain.
Constant Product Market Maker (CPMM)
An automated pricing model in DeFi that maintains a constant product of asset reserves in a liquidity pool to determine prices.
Health Factor (Lending)
A metric indicating the safety of a borrower’s loan relative to collateral value.
Consensus Algorithm
A consensus algorithm is a mechanism used by a blockchain network to achieve agreement among nodes on the validity and order of transactions in a decentralized system.
Domain Expertise (Prediction Market)
Specialized knowledge that enhances a participant’s ability to make accurate predictions in a specific field.
Active Management Burden
The ongoing requirement for liquidity providers to monitor and adjust positions in DeFi to optimize returns and mitigate risks.