How Does Lengthening the Settlement Window Mitigate the Risk of an Attack?
Lengthening the settlement window mitigates the risk of a settlement window attack by increasing the time and capital required for an attacker to sustain a price manipulation effort. Since the final settlement price is an average over the entire window, a longer period makes a temporary price spike less impactful on the final calculation, forcing the attacker to spend more to manipulate the price for a sustained duration.
Glossar
Settlement Window Attack
Vulnerability ⎊ A Settlement Window Attack targets the specific, often brief, time interval during which derivative contracts, such as options, are finalized based on an external price feed or index value.
Final Settlement Price
Valuation ⎊ The Final Settlement Price in cryptocurrency derivatives represents the agreed-upon value of the underlying asset at contract expiration, crucial for determining payouts in options and futures.
Settlement Window
Finality ⎊ The settlement window, within cryptocurrency derivatives, options trading, and broader financial derivatives, represents the discrete period during which the obligations arising from a contract are definitively resolved.