Delivery versus Payment (DvP)
A settlement mechanism that links the transfer of an asset to the simultaneous transfer of payment, eliminating principal risk.
Delivery versus Payment (DvP) ensures that an asset transfer only completes if the corresponding payment simultaneously completes — and vice versa. In traditional finance, DvP is enforced by central securities depositories and clearing houses, but involves T+2 settlement delays. If one leg fails, the other is cancelled.
Atomic transactions on blockchains achieve DvP natively: a smart contract can be programmed to release Asset A to Buyer only if Buyer simultaneously delivers Payment B to Seller, all within a single transaction. If either condition fails, the entire transaction reverts. This eliminates principal risk — the risk that one party delivers their side but doesn't receive the other — which is inherent in non-atomic traditional settlement.
Atomic DvP on-chain has significant implications for securities markets: tokenised bonds can settle versus stablecoin payment in seconds rather than two days, with no clearing house required. J.P. Morgan, Goldman Sachs, and the BIS have all run pilots demonstrating atomic DvP for tokenised securities.