On-chain arbitrage workflows often require a token holder to grant a smart contract permission to transfer tokens on their behalf. That token approval step is itself an on-chain transaction which consumes gas and must be mined before the arbitrage-executing transaction can safely transfer tokens. Philip Daian of Cornell University documented how transaction ordering and additional on-chain steps create exploitable timing windows in decentralized exchanges, illustrating why extra approvals can materially affect execution risk and timing.
How approvals affect latency
If approvals are already in place, arbitrage execution proceeds without an extra on-chain dependency and latency is limited to block propagation and miner inclusion. When an approval is absent, the actor must submit an approve transaction and wait for at least a confirmation before submitting the arbitrage transaction or risk a failed transfer. That additional submission and confirmation cycle increases elapsed time by one or more block intervals and exposes the operation to mempool-level competition, reordering, and front-running by other searchers. This is particularly relevant for maximal extractable value strategies where milliseconds and nonce ordering decide profitability.
Mitigations and alternatives
Users and protocol designers mitigate approval-related delays using patterns such as pre-approved allowances, proxy contracts, or off-chain signature schemes that permit approval without an immediate on-chain transaction. Vitalik Buterin of the Ethereum Foundation has discussed off-chain authorization patterns that reduce on-chain steps and therefore lower latency and gas overhead. Adopting permit-style signatures or relayer schemes reduces the need for a separate approve transaction at the moment of execution, shrinking the attack surface for frontrunners and the time-to-completion for arbitrageurs.
Consequences extend beyond individual trades. Increased on-chain friction pushes searchers to build more sophisticated monitoring and faster infrastructure, concentrating capabilities among well-resourced operators and shaping cultural norms around pre-approvals and custody. Environmentally, extra transactions raise aggregate gas usage, though Ethereum’s move to Proof-of-Stake affects energy impact. Territory matters because users in regions with less access to fast relayers or high gas tolerance may be excluded from profitable participation or forced into riskier practices.
In short, token approval gas does not inherently slow a trade if pre-approved, but when approvals are required at execution time they add measurable latency and risk. Protocol designs and off-chain authorization standards remain the primary tools to reduce that overhead.