Clear DefinitionsPayment Versus Payment (PvP)
1 min read
Pronunciation
[pay-ment vur-suhs pay-ment]
Analogy
Like exchanging payment and receipt at the same moment so neither party is exposed to non‑delivery risk.
Definition
A settlement mechanism ensuring that two linked payments—typically in foreign exchange or cross‑chain transfers—are settled simultaneously, eliminating principal risk.
Key Points Intro
PvP ensures atomic settlement of paired transfers to mitigate counterparty risk.
Key Points
Atomicity: Both legs settle or neither does.
Escrow: Funds locked until both conditions met.
Synchronization: Coordinated settlement timing.
Cross‑chain: Implemented via HTLCs or atomic swaps.
Example
In a cross‑chain swap, BTC and ETH transfers occur atomically via HTLCs so one cannot complete without the other.
Technical Deep Dive
Use dual HTLC: Party A locks BTC with hash H, Party B locks ETH with same H. Reveal preimage to claim one leg triggers claim on the other.
Security Warning
HTLC timeouts must be carefully set to avoid funds lockup.
Caveat
Requires continuous monitoring and on‑chain fees for both chains.
Payment Versus Payment (PvP) - Related Articles
No related articles for this term.