In Cryptocurrency Derivatives, How Does Throughput Affect Liquidation Efficiency?

High throughput is crucial for liquidation efficiency in cryptocurrency derivatives platforms, especially those offering high leverage. When the market moves sharply, a high volume of margin calls and liquidations must be processed immediately.

Low throughput can lead to liquidation backlogs, causing the platform to fail to close positions fast enough. This can result in "socialized losses" where the exchange's insurance fund is depleted, and losses are spread across other users.