Settlement Risk
Failure to convert terminal state into the correct asset claim.
#Risk mechanism
Even a correct payoff formula can settle incorrectly because of stale observation, unit mismatch, rounding, unavailable assets or ambiguous finality.
#Stress conditions
- Terminal feed is stale or paused.
- Multiplier changes around expiry.
- Settlement asset depegs or cannot transfer.
- Caller omission or duplicate execution.
- Chain reorganization or sequencer delay.
#Control principles
- Bind terminal observation to an explicit rule and time window.
- Snapshot price and multiplier coherently.
- Make settlement idempotent.
- Reconcile claims to assets before release.
- Define exceptional states without silent substitutions.