Transaction Finality Threshold

The transaction finality threshold is the number of blocks or the specific protocol condition that must be met for a transaction to be considered immutable. This threshold is a risk management parameter used by exchanges and derivative platforms to protect against chain reorganizations.

Setting the threshold too low increases the risk of fraud or accidental reversals, while setting it too high slows down the velocity of capital. The threshold is often dynamic, depending on the network's current health and security state.

Financial institutions and sophisticated traders use these thresholds to determine when they can safely proceed with high-value settlements. It is a critical component of the security policy for any decentralized financial asset.