Core

Jupiter

Millions

<h2 id="why-is-latency-emerging-as-a-core-constraint">Why Is Latency Emerging as a Core Constraint?</h2> A new report from Sodot argues that the next phase of on-chain finance will be defined by signing latency rather than throughput or liquidity. While blockchain infrastructure has moved toward sub-second execution, custody and key management systems remain slower, creating a structural bottleneck for institutional trading. The report, titled “The Latency Tax: How Milliseconds Define the Next Era of On-Chain Finance,” highlights a growing mismatch between execution speed and signing infrastructure. As blockchains approach near real-time finality, delays in generating signatures increasingly determine whether market participants can compete in high-frequency environments. This dynamic shifts the focus away from traditional metrics such as throughput and toward operational performance at the custody layer, where milliseconds can determine access to execution windows. 
<h2 id="how-have-on-chain-volumes-reached-institutional-scale">How Have On-Chain Volumes Reached Institutional Scale?</h2> Decentralized trading volumes have expanded rapidly, with perpetual DEX activity exceeding $6.5 trillion in 2025, a 2.5x increase year-on-year. Monthly volumes crossed $1 trillion for the first time in October, reflecting sustained growth in market participation. Individual platforms are now operating at scale comparable to centralized venues. Hyperliquid processed $2.93 trillion in annual volume, surpassing Coinbase’s $1.4 trillion over the same period. On Solana, the Jupiter aggregator captured 93.6% of routed DEX volume and handled $264.1 billion in perpetual trades. The composition of this activity has also shifted. Hybrid <a href="https://financefeeds.com/citigroup-j-p-morgan-and-morgan-stanley-to-trade-on-brokertec-chicago-at-launch/" rel="noopener noreferrer nofollow">central limit order book</a> models account for between 70% and 92% of perpetual DEX trading, indicating a strong institutional presence rather than purely retail-driven flows. By late 2025, decentralized platforms such as Hyperliquid and Lighter ranked among the top 10 global <a href="https://financefeeds.com/crypto-com-launches-multilingual-web-platform/" rel="noopener noreferrer nofollow">perpetual swap</a> venues, placing them alongside traditional exchanges in terms of execution expectations. 
<h3 id="investor-takeaway">Investor Takeaway</h3>
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 On-chain markets are operating at institutional scale, but infrastructure gaps remain. Firms that cannot match <a href="https://financefeeds.com/born-to-trade-podcast-trading-as-a-lifelong-skillset-with-jimmy-moyaha/" rel="noopener noreferrer nofollow">execution speed</a> with equally fast signing systems risk losing access to a meaningful share of trading opportunities.
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<h2 id="what-is-the-latency-tax-and-how-does-it-impact-trading">What Is the “Latency Tax” and How Does It Impact Trading?</h2> Sodot defines the “latency tax” as the cost created by delays in signing transactions, particularly in legacy MPC and SaaS custody systems that rely on network round trips. As blockchain finality compresses toward 100–150 milliseconds, systems that take 300ms to 1,000ms to sign transactions become structurally slower than the chains they operate on. Using Solana as an example, the report estimates that a one-second signing delay limits participation to around 40% of available execution windows. This leaves approximately 60% of opportunities—equivalent to 3.9 million monthly events—unreachable. The cost of missed execution is measurable. Based on observed volatility, Sodot estimates an average adverse price movement of 0.97 basis points per missed block, translating into an estimated 0.58 basis points per trade. At scale, the financial impact compounds quickly. A trading operation handling $1 billion in monthly volume could incur around $697,000 in annual latency costs, while $10 billion in monthly volume could result in nearly $7 million in losses, excluding additional effects such as missed hedging and MEV exposure. 
<h3 id="investor-takeaway">Investor Takeaway</h3>
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 Latency is now a quantifiable cost rather than a technical detail. As execution speeds compress, even sub-second delays in signing can translate directly into lost revenue at scale.
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<h2 id="how-is-infrastructure-evolving-to-address-the-gap">How Is Infrastructure Evolving to Address the Gap?</h2> Execution-layer improvements are accelerating across multiple networks. <a href="https://financefeeds.com/mixed-momentum-september-2025-alternative-strength-defi-growth-and-buyback-strategies/" rel="noopener noreferrer nofollow">Solana’s Alpenglow upgrade</a> is expected to reduce deterministic finality to around 100–150 milliseconds, while other networks are targeting even faster performance, including 10ms block times and sub-second finality through parallelized execution. At the same time, MPC protocols are evolving to reduce communication overhead. Earlier models required multiple rounds of interaction, resulting in latency of up to 900ms. Newer protocols reduce these requirements significantly, enabling signing times below 5ms when deployed in optimized environments. Deployment architecture is a key factor. Self-hosted MPC systems remove reliance on external service providers, reducing latency from wide-area network delays to internal communication speeds. This shift allows signing performance to align more closely with blockchain execution. However, performance improvements introduce additional considerations around security and operational design, particularly as systems become more complex and integrated with trading workflows. 
<h2 id="can-speed-be-achieved-without-compromising-security">Can Speed Be Achieved Without Compromising Security?</h2> The report highlights that security failures in <a href="https://financefeeds.com/what-crypto-developers-really-get-paid-to-do/" rel="noopener noreferrer nofollow">crypto continue to occur outside cryptographic systems</a>. In 2025, the industry recorded $4.04 billion in losses from hacks and exploits, with major incidents targeting interfaces, operational processes, and key management layers rather than underlying protocols. Examples include the $1.4–1.5 billion Bybit breach, where attackers manipulated the signing interface, as well as losses at Phemex and Nobitex and data breaches affecting Coinbase users. These incidents reinforce that performance improvements must be balanced with secure system design. Sodot argues that self-hosted MPC infrastructure can address both latency and security concerns by keeping key shares within client-controlled environments and reducing reliance on third-party systems. The model also allows for dynamic policy adjustments without requiring asset migration.

Report Finds Latency Costs Reach Millions for High-Volume…

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