Inter-Exchange Latency

Inter-exchange latency is the time delay experienced when information travels between different cryptocurrency exchanges. This delay is caused by network infrastructure, physical distance, and the varying processing speeds of exchange servers.

In the context of arbitrage, even a few milliseconds of latency can be the difference between a successful trade and a failed one. As the market evolves, firms invest heavily in dedicated fiber-optic lines and optimized server placement to reduce this delay.

Understanding this metric is vital for any participant engaging in cross-exchange strategies. It serves as a physical constraint that defines the limits of market efficiency and the speed at which prices can equalize across the ecosystem.