What Role Does Transaction Speed Play in the Profitability of Arbitrage Strategies Involving Derivatives? ▴ Learn

What Role Does Transaction Speed Play in the Profitability of Arbitrage Strategies Involving Derivatives?

Transaction speed is critical for the profitability of arbitrage strategies. Arbitrage opportunities are fleeting, often lasting only milliseconds.

Faster transaction confirmation on Layer 2 allows arbitrageurs to execute trades quickly, capturing the price discrepancy before others or before the market corrects itself. Slow transaction speed on Layer 1 can lead to failed transactions or missed opportunities, rendering the strategy unprofitable due to gas costs.

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