Relayer Latency Arbitrage

Relayer latency arbitrage is a strategy where traders exploit the time delay between price updates across different chains or venues. Because relayers take time to propagate information, there is a window where the price on one chain may not match the price on another.

Sophisticated actors use automated bots to execute trades in this window, capturing the spread at the expense of slower market participants. While this is often seen as a legitimate market mechanism, it can be abused if the relayer delay is intentionally manipulated or if the bridge infrastructure is slow by design.

This behavior extracts value from liquidity providers and contributes to the overall fragmentation of liquidity. It demonstrates how technical infrastructure limitations directly influence the efficiency and fairness of derivative markets.