Network Capacity

Network Capacity is the total volume of transactions that a blockchain network can handle within a given timeframe, determined by its consensus rules, block size, and block time. It represents the absolute limit of the system's operational capability.

For derivative protocols, understanding the network capacity is crucial for capacity planning and ensuring that the protocol can support the expected trading volume without failure. If the demand for a protocol exceeds the network capacity, the system will inevitably suffer from congestion, leading to high fees and slow execution.

Increasing network capacity is a primary driver of innovation in blockchain technology, as it is required for the mass adoption of decentralized financial services. It is a fundamental metric that dictates the potential scale of any on-chain financial application.