What Happens If Settlement Fails in SIP-4 ? Exercising an execution right in SIP-4 does not guarantee that the settlement process will be completed successfully. Once an Execute call is made, both parties must fulfill their obligations for the agreement to reach a successful conclusion. This possibility is also part of the SIP-4 design. When the agreement is created, the party assuming the execution obligation locks a Guarantee Deposit. According to the documentation, the purpose of this deposit is to support the fulfillment of obligations, make failure economically costly, and provide a source of compensation when necessary. If settlement fails, the Guarantee Deposit is the mechanism that comes into play. The documentation states that this collateral is designed for situations where contractual obligations cannot be fulfilled. How this mechanism is ultimately implemented is left to the protocol's final implementation. The Reservation Fee and the Guarantee Deposit serve different purposes. The Reservation Fee is paid to reserve an execution right. The Guarantee Deposit is associated with the obligations that arise during the execution process. Although both are components of the same agreement, they perform different functions. In SIP-4, a failed settlement is not treated solely as a technical outcome. The design also assigns economic consequences to that scenario. As a result, the execution obligation is supported by an economic security layer rather than relying solely on contractual commitment. #standxblog# @StandX_Official @Stander_StandX