System Congestion

System congestion occurs when an exchange or network is overwhelmed by the volume of requests or transactions. This can lead to increased latency, failed orders, or even temporary outages.

In cryptocurrency, this is often associated with blockchain network traffic during high volatility. For derivatives exchanges, it is usually a result of extreme trading volume exceeding the matching engine capacity.

Congestion forces traders to wait, which can be disastrous if they need to adjust a hedge or close a position. It is a critical systems risk that traders must account for in their risk management models.

Robust systems are designed to handle peak loads without degrading performance.