Finality Thresholds

Finality Thresholds define the point at which a transaction is considered permanently confirmed and irreversible on a blockchain. Different consensus mechanisms have varying degrees of finality, ranging from probabilistic to deterministic.

In financial derivatives, achieving fast and deterministic finality is essential to prevent reorgs from invalidating trades. Protocols must account for these thresholds when designing their settlement engines.

If a protocol treats a transaction as final before it actually is, it faces significant operational risk. Understanding these thresholds is vital for developers building high-stakes financial infrastructure.