How Does Smart Contract Scalability Impact the Execution of Complex Financial Derivatives?

Smart contract scalability directly affects the viability of executing complex financial derivatives on a blockchain. Low transaction throughput and high latency can delay or prevent the timely execution of time-sensitive derivative contracts, such as options, where price fluctuations are critical.

High transaction fees, or gas costs, during network congestion can make the frequent calculations and settlements required for complex derivatives economically unfeasible. These limitations can lead to significant price slippage and create arbitrage opportunities that undermine the reliability of the decentralized market.