Speed Bumps

Speed bumps are a mechanism used to slow down the processing of orders in a market to prevent high-frequency traders from exploiting latency. By introducing a deliberate delay, such as a few milliseconds, the protocol gives other participants time to react to new information.

This effectively neutralizes the advantage of those who have invested in faster infrastructure or co-location. Speed bumps are particularly relevant in the crypto space, where the lack of a central clearinghouse makes markets vulnerable to predatory speed-based strategies.

While they may slightly increase the time to trade, they contribute to a more level playing field and can lead to more stable, less toxic market conditions. They are a common tool in the debate over market fairness and speed.