Deep Reorg Attacks

A deep reorg attack occurs when an adversary with significant computational power or stake secretly mines a chain longer than the public one and releases it to invalidate recent transactions. In the context of derivatives, this could be used to reverse large liquidations or trade executions.

While rare, these attacks represent a systemic risk to networks relying on probabilistic finality. Deep reorgs are mitigated by protocols that implement checkpoints or finalize blocks at specific intervals.

Financial institutions are particularly wary of this risk, as it introduces uncertainty into the settlement of large-volume trades. Protecting against these attacks is a primary focus for network security research.