Co-location
Co-location (colo) is the practice of placing trading servers in the same physical data center as an exchange's matching engine to minimize network latency. In traditional finance, exchanges sell co-location access and enforce equal cable lengths to all participants in a given tier, creating a leveled latency playing field within each tier. In crypto, co-location is less formalized but equally important for centralized exchange trading — CEXs like Binance and Coinbase host their matching engines in specific data centers (often Equinix facilities), and professional trading firms deploy servers in nearby cages or cloud availability zones to minimize round-trip time. The latency advantage of co-location can be 10-100x compared to a distant cloud region (sub-millisecond vs tens of milliseconds). For on-chain MEV, the analogous practice is running full nodes near major builders and relays, or participating in low-latency transaction propagation networks like bloXroute's BDN.