A short exerpt from Episode 1 of 'The Crypto Mile,' where Brian and Steve discuss the risk of settling off-chain transactions with stablecoins.
The Herstatt risk, also known as settlement risk or cross-currency settlement risk, has problematic implications because of the lag between stablecoin transactions and settling them with their pegged currency off-chain.
Because stablecoins move irrevocably among buyers and sellers within minutes and the reserve assets that back stablecoins require a day or longer to settle, these deals could fail, leading to the Herstatt.
