Blockchain Viability Shifts from Speed to Fair Transaction Execution

The significance of raw transaction speed in determining a blockchain's viability for heavy trading is diminishing, according to a recent blog post by venture capital company a16z crypto. With advancements in blockchain capabilities, combined throughput across major networks has increased by more than 100 times over the past five years, from less than 25 transactions per second to over 3,400 transactions per second.

However, speed alone does not guarantee timely processing of transactions. Market makers require predictability and fairness in transaction execution, particularly during periods of rapid price changes. A16z notes that even if a network can process thousands of transactions per second, it may not be suitable for trading if a particular player causes delays or reshuffles transactions.

The issue is exemplified by the concept of Strong Chain Quality, which allows stakeholders to have guaranteed access to parts of each block, limiting the influence of one block proposer or other participants in the process. A16z researchers also highlight the risk of reordering, which can lead to market makers increasing spreads and hurting participants with worse prices and lower liquidity.

The stakes are growing as more capital moves on-chain, making fairness and efficiency of execution under stress essential for attracting institutional order flow and deep liquidity. a16z argues that only those chains providing these qualities will be able to attract deeper liquidity.