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We demonstrate from a system design perspective that nonlinearity can be exploited to minimize the impact of system margins on system performance for both point-to-point links and elastic optical networks. A nonlinear interaction causes a 2 dB reduction in launch power to be reduced to signal-to-noise ratio (SNR) penalty, and likewise, a 2 dB peak–peak (pk-pk) perturbation to the output power of an optical amplifier is reduced to SNR penalty (for 5, 10, and 20 spans). Extending this to a gain ripple of 1 dB pk-pk with an internode spacing of , , and , the penalty is 0.4 dB, 1.5 dB, and 5.1 dB, respectively, with pre-emphasis reducing this to 0.01 dB, 0.3 dB, and 1.2 dB, respectively. In elastic optical networks, we consider the nonlinear relationship among SNR, margin, and the fraction of capacity available. We consider scaling internode distances of a 9-node German scale …