What Is a Potential Vulnerability of a Commit-Reveal Scheme If the ‘Reveal’ Step Is Delayed?
If the 'reveal' step is significantly delayed, the user who submitted the commitment faces the risk of the market moving against their intended trade. If the price moves favorably, the user might choose not to reveal the transaction, a practice known as 'griefing' or 'transaction aborting.' This can lead to market inefficiency and wasted computational resources from the commitment phase.
A well-designed scheme must incentivize timely reveals and potentially penalize intentional delays or non-reveals.
Glossar
Failure to Reveal
Disclosure ⎊ Failure to Reveal, within the context of cryptocurrency derivatives, options trading, and financial derivatives, represents a deliberate or negligent omission of material information that could reasonably influence a counterparty's decision-making process.
Commit-Reveal
Mechanism ⎊ Commit-Reveal protocols, within decentralized finance, represent a staged disclosure of trading intentions, initially committing to a transaction and subsequently revealing the specifics.
Vulnerability
Exposure ⎊ Vulnerability within cryptocurrency, options, and derivatives manifests as quantifiable risk to capital stemming from imperfectly hedged positions or systemic dependencies.