SETTLEMENT AND PAYMENTS INFRASTRUCTURE

Collateral Management

The operational process of identifying, valuing, pledging, and monitoring assets used as security for financial obligations such as derivatives, repo, or margin loans. On-chain collateral management enables real-time substitution and automated margin calls.

EXAMPLE

Smart contract-driven collateral management at Goldman Sachs' digital asset platform triggers automatic margin top-ups when asset prices breach defined thresholds.

Relevant Roles and Functions

On-chain Role
Head of Digital Settlement Infrastructure
Function
Atomic Settlement Architecture
Blockchain-based Settlement Networks
Delivery-versus-payment Systems
Integration with Clearing Systems
Tokenized Asset Settlement
TradFi Equivalent
DTCC Connectivity
Payment Settlement Rails
Securities Clearing

Related Terms

Smart Contract

Self-executing code deployed on a blockchain that automatically enforces and carries out the terms of an agreement when predefined conditions are met—without requiring an intermediary to oversee performance.

Example

A smart contract can automatically release collateral when a loan is repaid, eliminating manual processing and reducing operational risk.

Real-World Asset

A traditional financial or physical asset—such as a government bond, real estate, private credit facility, or trade receivable—that has been tokenized and represented on a blockchain for on-chain trading, settlement, or collateral use.

Example

BlackRock's BUIDL fund tokenizes U.S. Treasury exposure, allowing institutions to use the token as real-time on-chain collateral instead of wiring cash.

Tokenized Security

A traditional financial instrument—equity, bond, or fund unit—represented as a digital token on a blockchain, with ownership rights, transfer restrictions, and corporate actions managed by smart contract logic.

Example

Franklin Templeton's FOBXX tokenized money market fund distributes dividends automatically via smart contract, eliminating the fund administrator's manual allocation process.

Counterparty Risk

The risk that the opposing party in a financial transaction defaults before settlement is complete. Atomic on-chain settlement targets the elimination of counterparty risk by making asset exchange simultaneous and conditional.

Example

Blockchain-based bilateral settlement reduces counterparty risk by making payment and delivery inseparable rather than relying on a clearing intermediary.

Atomic Settlement

The simultaneous, conditional exchange of two assets in a single blockchain transaction—both legs complete or neither does—eliminating the gap between trade execution and final settlement that creates counterparty risk in traditional markets.

Example

Atomic settlement of tokenized Treasuries versus stablecoins achieves true delivery-versus-payment with no T+1 lag and no central counterparty required.