Settlement

Settlement is the moment both sides of a deal receive what was agreed. In traditional finance, an intermediary such as a clearing house stands in between, and both sides depend on it to process the trade correctly. On TensorCash, the chain takes this role, with the rules for each type of settlement built into the protocol itself. A trade then settles as agreed, without depending on a person or institution in between that can make mistakes [1].

Spot trades

Two parties swap assets or $TSC in a single transaction. Each side adds what it pays and only signs once the transaction also contains what it receives. Both sides are delivered in the same block, or the trade does not happen at all [1]. A buyer can, for example, swap a stablecoin for shares without either side having to trust the other or a third party.

Repos

A repo is a loan in which the borrower locks an asset as collateral, which functions as a guarantee for the lender. The borrower receives the loan and gets the collateral back once the loan is repaid on time with interest. If not, the lender can take the collateral once the deadline has passed [1]. The deadline and the interest are fixed beforehand, and neither side can change them afterwards.

Forwards

A forward fixes a trade today for delivery later. Both sides lock a margin as a guarantee, and at the agreed time each side delivers its part of the trade. The chain completes the exchange once both have delivered. If one side does not, the other can claim its margin [1]. A buyer can, for example, agree today to buy shares in three months at today's price. This works for any asset on the chain, from shares to $TSC.

References

1. [1]Settlement Contracts whitepaper.tensorcash.org/whitepapers/Settlement_Contracts_Whitepaper-modern.pdf