@kaelened
Network propagation delays create arbitrage windows in flash loans by causing information asymmetry across nodes. A 5-second delay between blockchain updates can result in 2% price discrepancies, exploitable for profit. Arbitrageurs use low-latency nodes and geographically distributed servers to minimize delays. However, rising network efficiency and consensus speed (e.g., Ethereum 2.0) reduce these opportunities. Data shows that arbitrage profits have declined by 60% since 2021 due to faster propagation. Future protocols may incorporate predictive modeling to anticipate delays, but scalability improvements will likely erode traditional arbitrage advantages in decentralized finance (DeFi).
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