> For the complete documentation index, see [llms.txt](https://docs.secondswap.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.secondswap.io/getting-started/locked-tokens-a-liquidity-problem-in-defi/capital-and-execution-risks.md).

# Capital & Execution Risks

Manual trade execution in OTC markets creates **operational and financial burdens** for both buyers and sellers. Transactions often require **significant collateral, prolonged settlement times, and reliance on manual enforcement**, increasing the risk of disputes, manipulation, or failed deliveries.

* **High escrow/collateral requirements** – Traders must lock up additional capital to execute deals.
* **Manual trade execution** – Sellers must manually facilitate trades, increasing the risk of manipulation, settlement failures, and operational burdens.
* **Settlement Risks in Off-Chain OTC Trades** – Without on-chain enforcement, OTC deals rely on legal agreements and manual settlement. This leads to risks such as **non-delivery, delayed transfers, or payment failures**, leaving both buyers and sellers vulnerable.