# kaal:claim:3808852-024

**Claim.** Conflicts of interest and counterparty risks are absent on a decentralized exchange because proprietary trading intermediaries such as market makers and centralized third-party operators cannot inject themselves into a transaction.

**Type.** mechanism  **Support.** argued

**Holds when.**

- applies to DEX where settlement is delivery versus payment directly between trading parties

**Source quote.**

> Proprietary trading intermediaries, such as market makers and centralized third-party operators, cannot inject themselves in a transaction. As a result, conflicts and counterparty risks are absent in a DEX.

**From.** Wulf A. Kaal, *Decentralization and Feedback Effects* (2021), IV. Market Decentralization, page 17

**Cite as.** Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852

**Verify.** sha256 of source PDF `31e91158fdeefebc2f0be54ebf89751f7cdd4c89ecea932888f5ba9be6b1caba` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202021%20-%20Decentralization%20and%20Feedback%20Effects.pdf

**Topics.** risk-and-incentives, economics

**Keywords.** dex, counterparty-risk, market-makers, settlement

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