Blockchain Throughput Limits

Blockchain throughput limits represent the maximum number of transactions a network can process within a specific timeframe, typically measured in transactions per second. In the realm of financial derivatives, low throughput causes queues in the mempool, leading to delayed trade settlements and stalled liquidation processes.

When a derivative protocol relies on a chain with limited capacity, sudden market moves can congest the network, making it impossible for traders to adjust positions or add collateral. This creates a dangerous scenario where price discovery is decoupled from the actual ability to execute trades on-chain.

High throughput is essential for maintaining the real-time responsiveness required for complex financial instruments like options and perpetual swaps. These limits are often a trade-off between decentralization, security, and scalability within the blockchain trilemma.