a16z Says Throughput Alone Fails To Deliver What Financial Markets Need
TL;DR
- a16z published an analysis arguing that performance alone is insufficient for financial markets to adopt blockchains at a global scale.
- The document identifies three critical requirements that networks must meet: predictable and censorship-resistant inclusion, clear ordering rules, and pre-execution privacy.
- According to a16z, aggregate throughput grew more than 100 times over five years, but that progress does not guarantee the conditions that institutional markets require.
Blockchain performance is no longer the only relevant parameter for evaluating their suitability in financial markets. That is the argument made by a16z in an analysis, where it contends that throughput was merely the first test that networks had to pass.
With production systems already processing tens of thousands of transactions per second, the debate has shifted toward three more difficult requirements to resolve: predictable inclusion, transparent ordering, and privacy before execution.
The ability to process transactions at volume was for years the main obstacle for onchain financial applications. Without that baseline, placing an order or updating a position was costly and unpredictable during periods of high activity. That bottleneck was considerably reduced during the last infrastructure improvement cycle, although the a16z document warns that current test benches and new architectures could push those figures even higher.
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