How Do Proof-of-Stake (PoS) Finality Mechanisms Differ from Proof-of-Work (PoW) in Terms of MEV?
In PoW, finality is probabilistic, depending on the longest chain rule, which allows for temporary chain reorganizations and more opportunities for miners to execute MEV. PoS systems often have 'economic finality' where a transaction is finalized after a set number of attestations, making reorgs prohibitively expensive and reducing the window for MEV extraction after the initial proposal.
Glossar
Chain Reorganizations
Disruption ⎊ Chain Reorganizations represent a temporary, canonical divergence in the blockchain's history where two or more valid chains exist simultaneously, eventually resolving when one chain achieves greater cumulative proof-of-work or stake weight.
PoS Finality
Attestation ⎊ Proof-of-Stake (PoS) finality represents the point at which a blockchain transaction is considered irreversible, secured by cryptographic consensus mechanisms and economic incentives.
MEV Extraction
Extraction ⎊ MEV Extraction refers to the practice of miners or validators reordering, inserting, or censoring transactions within a block to profit from predictable patterns, a significant concern for on-chain options settlements.
Finality Mechanisms
Settlement ⎊ Finality mechanisms in cryptocurrency represent the procedures ensuring transaction irreversibility, differing significantly from traditional finance’s reliance on centralized intermediaries.