Layer-2 Settlement Race Conditions: Temporal Finality Gaps in Rollups and L2 Execution Systems

Layer-2 Settlement Race Conditions arise when discrepancies between execution finality on Layer-2 (L2) systems and settlement finality on Layer-1 (L1) blockchains create exploitable timing windows. These temporal gaps allow adversaries to reorder actions, withdraw assets, or trigger state transitions based on assumptions of finality that later prove invalid. As rollups and L2 execution systems scale transaction throughput and composability, settlement races evolve from edge-case anomalies into core systemic risks. This paper formalizes settlement race conditions as a distinct attack class, analyzes their structural enablers and execution patterns, and examines their implications for rollup security, bridge design, and institutional adoption. We conclude with mitigation requirements cen