Crypto's Instant Settlement Problem

Ethan Buchman, co-founder of Cosmos, says crypto's push for instant settlement is creating a capital inefficiency problem. This forces trading firms to fund every transaction in full, limiting how far markets can scale as volumes grow. Buchman argues that crypto markets are “asset-brained,” treating the financial system like a global stock market where value is constantly moved and swapped. The design of crypto markets, optimized for instant settlement, strips out the batching and netting that lets traditional finance conserve liquidity. This creates pressure to reintroduce clearing for the industry to scale further. Clearing is the process of reconciling and netting obligations before settlement, allowing participants to offset what they owe against what they are owed. The need for clearing in crypto markets will be a key topic of discussion at upcoming industry conferences, with the Cosmos community expected to weigh in on potential solutions by the end of Q2.