What Is the ‘Commitment’ Step in a Commit-Reveal Scheme and What Information Does It Contain?
The 'commitment' step is the first phase of the two-step commit-reveal process. In this step, the user calculates a cryptographic hash of their intended transaction details, which include the trade size, price, and a random secret number (salt).
The user then submits this hash to the blockchain. Crucially, the commitment contains no information that a front-runner can use to determine the trade's specifics, but it cryptographically proves that the user decided on the trade before the transaction was confirmed.
Glossar
Random Secret Number
Number ⎊ A random secret number is the private, unpredictable data value that a party commits to in the first phase of a commitment scheme, often representing a critical input for a decentralized application.
Secret Number
Number ⎊ The secret number, often referred to as a random salt or nonce, is a unique, high-entropy integer generated by a trader and used as a private input in the cryptographic hashing of a trade order.
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.
Commitment
Allocation ⎊ Commitment within cryptocurrency, options, and derivatives contexts frequently manifests as capital allocation strategies, dictating the proportion of a portfolio dedicated to specific assets or derivative positions.