The stalemate is over.

The Nuggets and Peyton Watson are separating.

The Nuggets, Cavaliers and Clippers reached a sign-and-trade agreement Wednesday that sends Watson and his new four-year contract worth $88 million to Cleveland for some draft picks.

The Nuggets are getting Cleveland’s unprotected first-round pick in 2031 and a second-round pick from Sacramento in 2032.

Cleveland is also sending Max Strus to Los Angeles in the trade.

After a breakout season, Watson’s supporters believed the 23-year-old earned a contract extension that matched or exceeded the five-year deal worth $125 million that Christian Braun received last summer. Watson was also eligible for an extension last summer, but the two sides failed to agree to a new deal. He changed his representation and joined Rich Paul’s Klutch Sports Group in the middle of last season.

While the Nuggets dealt with injuries, Watson displayed more offensive potential and averaged a career-high 14.6 points on 49.1% shooting from the field and 41.1% from 3-point range in his fourth NBA season.

The defensive potential that’s been obvious since the Nuggets drafted Watson with the 30^th pick of the 2022 draft moved more into the spotlight as Watson spent more time guarding opposing teams’ best scorers in a season where Aaron Gordon and Braun missed significant portions of the season with injury.

Watson’s detractors point to the small sample size and his own injury concerns. A pair of hamstring strains limited Watson to 54 appearances in the regular season, and he was not available in Denver’s short postseason run.

Now, Cleveland is betting Watson’s performance in January when he averaged nearly 22 points on 49% shooting from the field and better than 46% from 3 wasn’t a fluke, while the Nuggets continue to restock their draft capital.

Also part of the deal, the Wizards are sending Julian Reese to the Nuggets, who will waive Reese off his two-way deal.