What Is the Main Drawback of Using Atomic Settlement for High-Frequency Trading?
The main drawback is the inherent latency and cost associated with on-chain transactions. Atomic settlement requires transactions to be confirmed on the blockchain, which can take seconds or minutes, making it too slow for the millisecond execution speeds required by high-frequency trading (HFT) strategies.
HFT typically relies on off-chain or layer-2 solutions for speed.
Glossar
Atomic Settlement
Execution ⎊ The simultaneous exchange of assets occurs only when all predefined conditions of a smart contract are met.
Atomic Swaps
Exchange ⎊ A protocol allowing for the direct, peer-to-peer exchange of one cryptocurrency for another across disparate blockchain networks without the need for a centralized intermediary or custodian.
Block Finality
Assurance ⎊ Block Finality describes the state where a confirmed block, and all transactions contained within, cannot be reversed or altered by any subsequent network activity, establishing transactional certainty.