Blockchain speed alone no longer determines whether a network can support institutional trading, according to analysis from venture capital firm a16z. The more pressing concern is whether transactions execute in a predictable and fair order, a shift in priorities driven by the maturation of blockchain capabilities and the entry of traditional market participants.
Raw transaction throughput has improved dramatically. a16z reported that combined throughput across major networks has increased more than 100 times over five years, rising from less than 25 transactions per second to over 3,400 transactions per second, with some production systems now processing tens of thousands of transactions per second. Yet speed alone does not solve the core problem facing on-chain markets: traders need certainty about when their transactions will be executed, not just whether they can be executed quickly.
Why Predictability Matters More Than Speed
Market conditions during price volatility expose the limitations of raw speed. When prices move rapidly, market makers need to cancel outdated orders and place new ones immediately. If cancellations are delayed, arbitrageurs can exploit stale prices before market makers can update their orders, creating losses. This dynamic can incentivize market makers to widen spreads, ultimately harming all market participants through worse pricing and reduced liquidity.
a16z identifies two criteria for reliable execution: valid transactions must be included in blocks according to rules that participants can understand in advance. The firm has also proposed the concept of Strong Chain Quality, which would guarantee stakeholders access to parts of each block, limiting the influence of any single block proposer or participant.
The Regulatory and Extraction Challenge
Transaction reordering risk is closely tied to maximal extractable value (MEV), where actors profit by changing the sequence of transactions or including or excluding them entirely. Sandwich attacks, in which an attacker executes transactions before and after a user's transaction to capture value from price movement, exemplify this problem.
Regulators have flagged these risks. In June 2022, the Bank for International Settlements warned that blockchain validators might use transaction sequencing for front-running and sandwich trades prohibited in traditional markets. In December 2023, IOSCO highlighted market integrity concerns through policy recommendations on decentralized finance.
Research cited in a September 2026 fair-ordering paper indicates that MEV-related activity has extracted more than $686 million cumulatively from Ethereum users.
Institutional Adoption and the Path Forward
As capital moves on-chain, only blockchains capable of fair and efficient execution under stress conditions are likely to attract institutional order flow and sufficient liquidity. a16z notes that the necessary protocols are more complex than current technologies, and best execution mechanisms remain under development.
Some networks have already made progress. Solana has reduced malicious sandwich activity through more efficient ordering, private transaction routing, and confidential execution. As a result, malicious extraction now represents a small fraction of the network's blockspace activity.
