How Does Transaction Latency Affect the Profitability of AMM Arbitrage? ⎊ Path

How Does Transaction Latency Affect the Profitability of AMM Arbitrage?

Transaction latency, the time between a trade being submitted and confirmed on the blockchain, is a critical factor. High latency allows other arbitrageurs to spot and execute the trade first, leading to "front-running" or simply the opportunity disappearing.

In a highly competitive environment, only the fastest transactions, often those paying higher gas fees, will successfully capture the profit. Lower latency increases the chance of a successful and profitable execution.

How Does a Shorter Block Time on a Blockchain Affect the Window of Opportunity for Front-Running?

What Is the Primary Mechanism by Which a Dark Pool Prevents Front-Running?

What Is the Difference between Front-Running and Latency Arbitrage in Traditional Options Trading?

What Are the Similarities and Differences between a Stablecoin Run and a Traditional Bank Run?

How Does Latency Affect an Arbitrageur’s Ability to Profit from a Pool?

Why Is Transaction Speed Critical for Stablecoin Arbitrage?

How Do Exchanges Design “Speed Bumps” or Randomized Order Queues to Counter HFT Detection of Icebergs?

How Does a High Gas Fee Translate into a Higher Probability of a Transaction Being Front-Run?

Glossar

Gas Price Influence

Volatility ⎊ Gas price influence within cryptocurrency derivatives represents the impact of network congestion on the cost of executing transactions, directly affecting the profitability of arbitrage and hedging strategies.

Transaction Latency

Execution ⎊ Within cryptocurrency, options trading, and financial derivatives, execution latency represents the temporal delay between the initiation of a transaction and its conclusive settlement.