TPS Limits

TPS limits refer to the maximum transactions per second a blockchain can handle before the network experiences performance degradation or consensus failure. These limits are determined by the network's block size, block time, and the hardware requirements for validators.

In the context of derivatives and high-frequency trading, these limits are a significant bottleneck for on-chain scalability. If a protocol hits its TPS limit, transaction costs skyrocket, and execution speed drops, making it difficult to maintain efficient order books or manage margin requirements.

Developers often implement various scaling solutions, such as sharding or rollups, to push these limits higher. Understanding these constraints is essential for evaluating whether a protocol can support institutional-grade financial volume.