Counterparty risk
The risk a transaction counterparty fails to meet its obligation — applies broadly to issuers, custodians, and exchanges.
For stablecoin holders, the main counterparty is the issuer (will it honour redemption?). For yield-seekers, additional counterparties stack: custodian (will the bank holding reserves stay solvent?), exchange (will the perp venue settle?), bridge operator, oracle. CeFi failures and SVB's collapse are recent reminders the chain only breaks at its weakest link.
Related terms
- Custody riskThe risk a custodian (bank, exchange, qualified custodian) loses, mismanages, or is denied access to reserves it holds.
- CeFi (centralised finance)Custodial financial services for crypto — exchanges, lenders, brokerages — operated by an identifiable corporate entity.
- Bank runCoordinated mass redemption that exhausts an issuer's liquid reserves before all holders can be paid.