How Does the Choice of a Time-Weighted Average Price (TWAP) Calculation Defend against This Attack?

The TWAP calculation defends against a settlement window attack by ensuring that the final settlement price is based on the average price over the entire window, not just a momentary spike. To manipulate the TWAP, an attacker must sustain the artificial price for the duration of the window, which is extremely costly and often impractical.

A brief, high-impact attack will have minimal effect on the final averaged price.