How Does the Difficulty Adjustment Mechanism Protect the Network from Rapid Hashrate Fluctuations?

The difficulty adjustment mechanism protects the network by ensuring a stable block issuance rate despite rapid hashrate fluctuations. If a large amount of hashrate joins the network (e.g. from a rental market), blocks are found faster.

The mechanism then automatically increases the difficulty, slowing the block rate back to the target. Conversely, if hashrate leaves, difficulty decreases.

This stability is crucial for maintaining the predictable supply schedule and transaction finality, preventing malicious hashrate surges from disrupting the network.