Artem Duvanov
DVP for digital assets
APRIL 6, 2019

80% of the trades with crypto assets take place at the OTC market. OTC is the method of choice of market players with big tickets searching for the opaque marketplace and high liquidity.

Unfortunately, the participants of crypto-to-fiat and fiat-to-crypto deals are exposed to the settlement risk—the risk that one of the counterparties will fail to deliver tokens or their value in cash as per the agreement.
In real life, it is a bit more entangled than a plain "failure to deliver". You can get an idea of how it could happen in the recent GSR story.

Luckily, the crypto industry has the older brother who knows all ins and outs of dealing with the settlement risk. The service known as DVP (delivery versus payment) which gave a decisive impulse to the development of the securities market, was invented more than 40 years ago.

D3Ledger offers DVP for digital assets, helping to avoid the settlement risk at the OTC market. Here's how it works step by step.


Deal →
The Seller and the Buyer makes a deal with the help of OTC brokers.
Deposit¹
The Seller deposits Tokens to her account with D3ledger.

The Buyer converts² US dollars to digital form and puts them to her account with D3ledger.
Settle
The Buyer captures the deal as the proposal of DVP transaction in D3ledger and signs it with her private key.

The Seller gets a notification on the proposal and signs it with its private key.

D3ledger includes DVP transaction in the distributed ledger, and both its legs are immediately executed³.
Withdrawal ⚫
Now both counterparties can safely withdraw Tokens and Digital US dollars.

Digital US Dollars can be converted into cash by the Seller's OTC broker.
* * *
  1. Deposit and Withdrawal steps are not required if the counterparties use D3ledger as custody for their digital assets
  2. The conversion is done the Buyer's OTC Broker.
  3. D3ledger guarantees that either both legs are executed or both are not. The settlement doesn't depend on any third party and bears zero settlement risk.
* * *
About the author

Artem Duvanov is the leader of D3ledger project and Head of Innovation at National Settlement Depository, Moscow Exchange Group. Connect with Artem on Linkedin.
More on D3ledger

Subscribe to our newsletter