How Does an Exchange’s Matching Engine Speed Affect Liquidation Success?
The speed and efficiency of the exchange's matching engine are critical for successful liquidation. A fast matching engine can execute the liquidation order immediately, minimizing the chance of the market moving further against the position before it is closed.
A slow or congested engine can delay the execution, leading to a much worse fill price and a higher probability of a deficit that must be covered by the insurance fund. Speed is a key risk mitigation factor.
Glossar
Speed and Efficiency
Latency ⎊ Speed and efficiency in cryptocurrency, options, and derivatives markets fundamentally relate to minimizing latency ⎊ the delay between initiating an order and its execution.
Speed
Velocity ⎊ Speed within cryptocurrency, options, and derivatives contexts primarily denotes the rate at which transactions are processed and confirmed, impacting market efficiency and arbitrage opportunities.
Matching Engine
Architecture ⎊ The core of a cryptocurrency derivatives matching engine lies in its deterministic order processing, designed to ensure fairness and transparency within a decentralized ecosystem.
Matching Engine Speed
Throughput ⎊ Matching Engine Speed, within cryptocurrency and derivatives markets, fundamentally dictates the system’s capacity to process orders, directly influencing latency and order execution rates.