a16z says blockchain speed is no longer enough to support on-chain markets

Transaction speed is no longer the only criterion for measuring the feasibility of blockchain

According to a blog post published by venture capital firm a16z Crypto on September 3, the importance of using raw transaction speed as a criterion for judging whether blockchain is suitable for high-frequency trading is declining. A more critical consideration is whether transactions arrive on time and are executed in a predictable order.

This distinction is crucial for banks, asset issuers and market makers as they move from traditional areas to on-chain businesses. Even if a network can process thousands of transactions per second, it is not an ideal trading option if the behavior of specific participants causes transactions to be delayed or reshuffled in order.

Why throughput is no longer a differentiated advantage

The capabilities of blockchain have been significantly improved. a16z pointed out in the "2025 State of the Crypto Industry Report" that in the past five years, the total throughput of major networks has increased more than 100 times, from less than 25 transactions per second to more than 3,400 transactions per second. His September blog post also mentioned that certain production systems can process tens of thousands of transactions per second.

However, speed alone cannot tell a trader when a trade will be processed. Payment scenarios can tolerate a one-second delay, but financial markets cannot afford it, especially during periods of sharp price fluctuations. A September 2026 paper on fair ranking cited data from more than $686 million in cumulative MEV-related value extracted from Ethereum users.

Why high-speed chains may still perform poorly

a16z illustrates this through problems with the order book on the chain. Suppose the Federal Reserve issues an announcement that causes prices to soar, and the market-maker quickly cancels outdated offers and replaces them with new ones. If these cancellation orders are not delivered in time, the arbitrageur will profit from the old price information, and the market maker will face losses before it can place new orders.

The company explored this issue in its previous research on "predictable on-chain execution." This risk may cause market makers to widen bid-ask spreads, thereby harming overall participants with worse prices and lower liquidity. A16z clearly states that predictability is guaranteed by two criteria: valid transactions will be incorporated into the process and arranged according to rules that participants can understand in advance.

Researchers at a16z have also proposed the concept of "Strong Chain Quality" that allows stakeholders to guarantee access to parts of each block, thereby limiting the influence of a single block proposer or other participant in the process.

Regulators have long warned that rearrangement risks

This issue is necessarily related to the maximum extractable value (MEV), which holders profit by changing the order order, including including or excluding transactions. A famous example is the "sandwich attack", in which an attacker performs transactions before and after transactions by innocent users, earning profits from price changes.

In June 2022, the Bank for International Settlements warned that verifiers of blockchain transactions may use transaction sequencing to engage in preemptive transactions and sandwich transactions, which are not allowed in traditional markets. In December 2023, the International Organization of Securities Commissions (IOSCO) also emphasized the importance of market integrity and investor protection in the nine policy recommendations in its report on decentralized finance.

A paper titled "Fair Ranking" states that unfair transaction sequencing and MEV issues have stolen more than $686 million from Ethereum users. The work cited cumulative data from previous MEV studies rather than listing it as a new total loss for 2026.

The significance of institutions entering the chain

As more money enters the chain, stakes continue to rise. Previous reports have pointed out that as the Solana network adopts more efficient sorting, private transaction routing, and confidential execution mechanisms, malicious sandwich activity has become a small proportion of network blockspace activity. "Malicious extractions now account for only a tiny fraction of block space activity, and the ranking value of most transactions reflects legitimate competition for inclusion and speed."-- said Lucas Bruder, co-founder and CEO of Jito Labs.

A16z makes a more general argument for this transition. It is likely that only chains that can provide fairness and execution efficiency under pressure can attract institutional order flows and gain sufficient deep liquidity. A16z believes that the protocols required are more complex than the technology currently in use, and that the best order execution mechanism is still "under development."