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

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** 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?](https://learn.greeks.live/path/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?](https://learn.greeks.live/path/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?](https://learn.greeks.live/path/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?](https://learn.greeks.live/path/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?](https://learn.greeks.live/path/how-does-latency-affect-an-arbitrageurs-ability-to-profit-from-a-pool/)

- [Why Is Transaction Speed Critical for Stablecoin Arbitrage?](https://learn.greeks.live/path/why-is-transaction-speed-critical-for-stablecoin-arbitrage/)

- [How Do Exchanges Design “Speed Bumps” or Randomized Order Queues to Counter HFT Detection of Icebergs?](https://learn.greeks.live/path/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?](https://learn.greeks.live/path/how-does-a-high-gas-fee-translate-into-a-higher-probability-of-a-transaction-being-front-run/)

## Glossar

### [Gas Price Influence](https://learn.greeks.live/area/gas-price-influence/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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](https://learn.greeks.live/area/transaction-latency/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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

## Discover More

### [How Do Transaction Fees (Gas Costs) Affect the Profitability of These Arbitrage Opportunities?](https://learn.greeks.live/path/how-do-transaction-fees-gas-costs-affect-the-profitability-of-these-arbitrage-opportunities/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Transaction Fees (Gas Costs) Affect the Profitability of These Arbitrage Opportunities?](https://learn.greeks.live/wp-content/uploads/2025/10/Reflective-Optical-Array-Modulating-Decentralized-Ledger-Volatility-Surface-Through-Synthesized-Derivative-Geometry.webp)

Gas costs are a critical friction, reducing net profit and potentially eliminating small arbitrage gains.

### [What Role Do Transaction Fees Play in Arbitrage Profitability?](https://learn.greeks.live/path/what-role-do-transaction-fees-play-in-arbitrage-profitability/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Role Do Transaction Fees Play in Arbitrage Profitability?](https://learn.greeks.live/wp-content/uploads/2025/10/Automated-Market-Maker-Liquidity-Provision-Spooling-Mechanism-Underlying-Collateralized-Asset-Digital-Ledger.webp)

Fees (gas) are a cost that must be less than the profit from the price difference; high fees can make small arbitrage opportunities unprofitable.

### [How Do Central Bank Policies on Interest Rates Affect the Profitability of Derivative Arbitrage?](https://learn.greeks.live/path/how-do-central-bank-policies-on-interest-rates-affect-the-profitability-of-derivative-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Central Bank Policies on Interest Rates Affect the Profitability of Derivative Arbitrage?](https://learn.greeks.live/wp-content/uploads/2025/10/Visualizing-Gamma-Exposure-Dynamics-Through-Implied-Volatility-Surface-Contraction-in-Digital-Asset-Options.webp)

Central bank rate hikes increase the cost of carry, widening no-arbitrage bounds and reducing arbitrage profitability.

### [What Is a "Sandwich Attack" in the Context of AMM Arbitrage?](https://learn.greeks.live/path/what-is-a-sandwich-attack-in-the-context-of-amm-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is a "Sandwich Attack" in the Context of AMM Arbitrage?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetric-Dual-Winged-High-Frequency-Trading-Vector-Approaching-Lunar-Settlement-Derivatives-Horizon.webp)

An attacker places a buy order before and a sell order after a victim's trade to profit from the price change caused by the victim.

### [How Does the Concept of "Latency" Affect High-Frequency Traders' Order Priority?](https://learn.greeks.live/path/how-does-the-concept-of-latency-affect-high-frequency-traders-order-priority/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the Concept of "Latency" Affect High-Frequency Traders' Order Priority?](https://learn.greeks.live/wp-content/uploads/2025/10/Conceptualizing-High-Frequency-Trading-Rotation-Mechanisms-in-Decentralized-Exchange-Liquidity-Provision.webp)

Low latency is crucial for HFTs to gain time priority in the order book, securing execution at the best price and capturing arbitrage.

### [What Is 'Latency Arbitrage' and How Does 'Last Look' Attempt to Mitigate It?](https://learn.greeks.live/path/what-is-latency-arbitrage-and-how-does-last-look-attempt-to-mitigate-it/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is 'Latency Arbitrage' and How Does 'Last Look' Attempt to Mitigate It?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetrical-Digital-Asset-Interfacing-Mechanism-Representing-Hedging-Strategies-in-Decentralized-Finance.webp)

Latency arbitrage exploits price differences with speed; 'last look' lets the LP reject trades at stale prices to prevent being exploited.

### [How Does the Cost of Borrowing Funds Affect the Profitability of This Arbitrage?](https://learn.greeks.live/path/how-does-the-cost-of-borrowing-funds-affect-the-profitability-of-this-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the Cost of Borrowing Funds Affect the Profitability of This Arbitrage?](https://learn.greeks.live/wp-content/uploads/2025/10/Exposed-Cryogenic-Actuator-Mechanism-Illustrating-Complex-Perpetual-Futures-Settlement-Architecture.webp)

High borrowing costs reduce the profit margin; the interest rate must be less than the futures premium to be profitable.

### [How Does Transaction Latency Affect the Success Rate of a JIT Liquidity Bot?](https://learn.greeks.live/path/how-does-transaction-latency-affect-the-success-rate-of-a-jit-liquidity-bot/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Transaction Latency Affect the Success Rate of a JIT Liquidity Bot?](https://learn.greeks.live/wp-content/uploads/2025/10/Mechanistic-Assembly-Depicting-Latent-Space-Mapping-for-Decentralized-Autonomous-Organization-Governance-Oracles.webp)

Low latency is essential to ensure the liquidity provision and removal are executed atomically with the target swap, minimizing market risk exposure.

### [Why Is Low Latency Crucial for Minimizing Execution Costs in Arbitrage?](https://learn.greeks.live/path/why-is-low-latency-crucial-for-minimizing-execution-costs-in-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Is Low Latency Crucial for Minimizing Execution Costs in Arbitrage?](https://learn.greeks.live/wp-content/uploads/2025/10/Tungsten-Carbide-Ring-on-Hydroplaned-Metal-Surface-Illustrating-Impermanent-Liquidity-Pool-Volatility-Dynamics.webp)

Low latency minimizes the time for price changes, thus reducing slippage and preserving the arbitrage profit margin.

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**Original URL:** https://learn.greeks.live/learn/how-does-transaction-latency-affect-the-profitability-of-amm-arbitrage/
