diff --git a/Cargo.toml b/Cargo.toml
index 5efa16115826e..32841e9bbf113 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -562,3 +562,9 @@ icon = "@mipmap/ic_launcher"
 build_targets = ["aarch64-linux-android", "armv7-linux-androideabi"]
 min_sdk_version = 16
 target_sdk_version = 29
+
+# Stress Tests
+[[example]]
+name = "transform_hierarchy"
+path = "examples/stress_tests/transform_hierarchy.rs"
+
diff --git a/examples/README.md b/examples/README.md
index 53d276d646d81..21b9c50c6c8f9 100644
--- a/examples/README.md
+++ b/examples/README.md
@@ -65,6 +65,7 @@ git checkout v0.4.0
   - [WASM](#wasm)
     - [Setup](#setup-2)
     - [Build & Run](#build--run-2)
+- [Stress Tests](#stress-tests)
 
 # The Bare Minimum
 
@@ -408,3 +409,17 @@ ruby -run -ehttpd examples/wasm
 To load assets, they need to be available in the folder examples/wasm/assets. Cloning this
 repository will set it up as a symlink on Linux and macOS, but you will need to manually move
 the assets on Windows.
+
+# Stress Tests
+
+These examples are used to test the performance and stability of various parts of the engine in an isolated way.
+
+Due to the focus on performance it's recommended to run the stress tests in release mode:
+
+```sh
+cargo run --release --example <example name>
+```
+
+Example | File | Description
+--- | --- | ---
+`transform_hierarchy.rs` | [`stress_tests/transform_hierarchy.rs`](./stress_tests/transform_hierarchy.rs) | Various test cases for hierarchy and transform propagation performance
diff --git a/examples/stress_tests/transform_hierarchy.rs b/examples/stress_tests/transform_hierarchy.rs
new file mode 100644
index 0000000000000..360f992f129f6
--- /dev/null
+++ b/examples/stress_tests/transform_hierarchy.rs
@@ -0,0 +1,546 @@
+//! Hierarchy and transform propagation stress test.
+//!
+//! Running this example:
+//!
+//! ```
+//! cargo r --release --example transform_hierarchy -- <configuration name>
+//! ```
+//!
+//! | Configuration        | Description                                                       |
+//! | -------------------- | ----------------------------------------------------------------- |
+//! | `large_tree`         | A fairly wide and deep tree.                                      |
+//! | `wide_tree`          | A shallow but very wide tree.                                     |
+//! | `deep_tree`          | A deep but not very wide tree.                                    |
+//! | `chain`              | A chain. 2500 levels deep.                                        |
+//! | `update_leaves`      | Same as `large_tree`, but only leaves are updated.                |
+//! | `update_shallow`     | Same as `large_tree`, but only the first few levels are updated.  |
+//! | `humanoids_active`   | 4000 active humanoid rigs.                                        |
+//! | `humanoids_inactive` | 4000 humanoid rigs. Only 10 are active.                           |
+//! | `humanoids_mixed`    | 2000 active and 2000 inactive humanoid rigs.                      |
+
+use bevy::prelude::*;
+use rand::Rng;
+
+/// pre-defined test configurations with name
+const CONFIGS: [(&str, Cfg); 9] = [
+    (
+        "large_tree",
+        Cfg {
+            test_case: TestCase::NonUniformTree {
+                depth: 18,
+                branch_width: 8,
+            },
+            update_filter: UpdateFilter {
+                probability: 0.5,
+                min_depth: 0,
+                max_depth: u32::MAX,
+            },
+        },
+    ),
+    (
+        "wide_tree",
+        Cfg {
+            test_case: TestCase::Tree {
+                depth: 3,
+                branch_width: 500,
+            },
+            update_filter: UpdateFilter {
+                probability: 0.5,
+                min_depth: 0,
+                max_depth: u32::MAX,
+            },
+        },
+    ),
+    (
+        "deep_tree",
+        Cfg {
+            test_case: TestCase::NonUniformTree {
+                depth: 25,
+                branch_width: 2,
+            },
+            update_filter: UpdateFilter {
+                probability: 0.5,
+                min_depth: 0,
+                max_depth: u32::MAX,
+            },
+        },
+    ),
+    (
+        "chain",
+        Cfg {
+            test_case: TestCase::Tree {
+                depth: 2500,
+                branch_width: 1,
+            },
+            update_filter: UpdateFilter {
+                probability: 0.5,
+                min_depth: 0,
+                max_depth: u32::MAX,
+            },
+        },
+    ),
+    (
+        "update_leaves",
+        Cfg {
+            test_case: TestCase::Tree {
+                depth: 18,
+                branch_width: 2,
+            },
+            update_filter: UpdateFilter {
+                probability: 0.5,
+                min_depth: 17,
+                max_depth: u32::MAX,
+            },
+        },
+    ),
+    (
+        "update_shallow",
+        Cfg {
+            test_case: TestCase::Tree {
+                depth: 18,
+                branch_width: 2,
+            },
+            update_filter: UpdateFilter {
+                probability: 0.5,
+                min_depth: 0,
+                max_depth: 8,
+            },
+        },
+    ),
+    (
+        "humanoids_active",
+        Cfg {
+            test_case: TestCase::Humanoids {
+                active: 4000,
+                inactive: 0,
+            },
+            update_filter: UpdateFilter {
+                probability: 1.0,
+                min_depth: 0,
+                max_depth: u32::MAX,
+            },
+        },
+    ),
+    (
+        "humanoids_inactive",
+        Cfg {
+            test_case: TestCase::Humanoids {
+                active: 10,
+                inactive: 3990,
+            },
+            update_filter: UpdateFilter {
+                probability: 1.0,
+                min_depth: 0,
+                max_depth: u32::MAX,
+            },
+        },
+    ),
+    (
+        "humanoids_mixed",
+        Cfg {
+            test_case: TestCase::Humanoids {
+                active: 2000,
+                inactive: 2000,
+            },
+            update_filter: UpdateFilter {
+                probability: 1.0,
+                min_depth: 0,
+                max_depth: u32::MAX,
+            },
+        },
+    ),
+];
+
+fn print_available_configs() {
+    println!("available configurations:");
+    for (name, _) in CONFIGS {
+        println!("  {name}");
+    }
+}
+
+fn main() {
+    // parse cli argument and find the selected test configuration
+    let cfg: Cfg = match std::env::args().nth(1) {
+        Some(arg) => match CONFIGS.iter().find(|(name, _)| *name == arg) {
+            Some((name, cfg)) => {
+                println!("test configuration: {name}");
+                cfg.clone()
+            }
+            None => {
+                println!("test configuration \"{arg}\" not found.\n");
+                print_available_configs();
+                return;
+            }
+        },
+        None => {
+            println!("missing argument: <test configuration>\n");
+            print_available_configs();
+            return;
+        }
+    };
+
+    println!("\n{:#?}", cfg);
+
+    App::new()
+        .insert_resource(cfg)
+        .add_plugins(MinimalPlugins)
+        .add_plugin(TransformPlugin::default())
+        .add_startup_system(setup)
+        .add_system(update)
+        .run()
+}
+
+/// test configuration
+#[derive(Debug, Clone)]
+struct Cfg {
+    /// which test case should be inserted
+    test_case: TestCase,
+    /// which entities should be updated
+    update_filter: UpdateFilter,
+}
+
+#[allow(unused)]
+#[derive(Debug, Clone)]
+enum TestCase {
+    /// a uniform tree, exponentially growing with depth
+    Tree {
+        /// total depth
+        depth: u32,
+        /// number of children per node
+        branch_width: u32,
+    },
+    /// a non uniform tree (one side is deeper than the other)
+    /// creates significantly less nodes than `TestCase::Tree` with the same parameters
+    NonUniformTree {
+        /// the maximum depth
+        depth: u32,
+        /// max number of children per node
+        branch_width: u32,
+    },
+    /// one or multiple humanoid rigs
+    Humanoids {
+        /// number of active instances (uses the specified [`UpdateFilter`])
+        active: u32,
+        /// number of inactive instances (always inactive)
+        inactive: u32,
+    },
+}
+
+/// a filter to restrict which nodes are updated
+#[derive(Debug, Clone)]
+struct UpdateFilter {
+    /// starting depth (inclusive)
+    min_depth: u32,
+    /// end depth (inclusive)
+    max_depth: u32,
+    /// probability of a node to get updated (evaluated at insertion time, not during update)
+    /// 0 (never) .. 1 (always)
+    probability: f32,
+}
+
+/// update component with some per-component value
+#[derive(Component)]
+struct Update(f32);
+
+/// update positions system
+fn update(time: Res<Time>, mut query: Query<(&mut Transform, &mut Update)>) {
+    for (mut t, mut u) in query.iter_mut() {
+        u.0 += time.delta_seconds() * 0.1;
+        set_translation(&mut t.translation, u.0);
+    }
+}
+
+/// set translation based on the angle `a`
+fn set_translation(translation: &mut Vec3, a: f32) {
+    translation.x = a.cos() * 32.0;
+    translation.y = a.sin() * 32.0;
+}
+
+fn setup(mut commands: Commands, cfg: Res<Cfg>) {
+    let mut cam = OrthographicCameraBundle::new_2d();
+    cam.transform.translation.z = 100.0;
+    commands.spawn_bundle(cam);
+
+    let result = match cfg.test_case {
+        TestCase::Tree {
+            depth,
+            branch_width,
+        } => {
+            let tree = gen_tree(depth, branch_width);
+            spawn_tree(&tree, &mut commands, &cfg.update_filter, default())
+        }
+        TestCase::NonUniformTree {
+            depth,
+            branch_width,
+        } => {
+            let tree = gen_non_uniform_tree(depth, branch_width);
+            spawn_tree(&tree, &mut commands, &cfg.update_filter, default())
+        }
+        TestCase::Humanoids { active, inactive } => {
+            let mut result = InsertResult::default();
+            let mut rng = rand::thread_rng();
+
+            for _ in 0..active {
+                result.combine(spawn_tree(
+                    &HUMANOID_RIG,
+                    &mut commands,
+                    &cfg.update_filter,
+                    Transform::from_xyz(
+                        rng.gen::<f32>() * 500.0 - 250.0,
+                        rng.gen::<f32>() * 500.0 - 250.0,
+                        0.0,
+                    ),
+                ));
+            }
+
+            for _ in 0..inactive {
+                result.combine(spawn_tree(
+                    &HUMANOID_RIG,
+                    &mut commands,
+                    &UpdateFilter {
+                        // force inactive by setting the probability < 0
+                        probability: -1.0,
+                        ..cfg.update_filter
+                    },
+                    Transform::from_xyz(
+                        rng.gen::<f32>() * 500.0 - 250.0,
+                        rng.gen::<f32>() * 500.0 - 250.0,
+                        0.0,
+                    ),
+                ));
+            }
+
+            result
+        }
+    };
+
+    println!("\n{:#?}", result);
+}
+
+/// overview of the inserted hierarchy
+#[derive(Default, Debug)]
+struct InsertResult {
+    /// total number of nodes inserted
+    inserted_nodes: usize,
+    /// number of nodes that get updated each frame
+    active_nodes: usize,
+    /// maximum depth of the hierarchy tree
+    maximum_depth: usize,
+}
+
+impl InsertResult {
+    fn combine(&mut self, rhs: Self) -> &mut Self {
+        self.inserted_nodes += rhs.inserted_nodes;
+        self.active_nodes += rhs.active_nodes;
+        self.maximum_depth = self.maximum_depth.max(rhs.maximum_depth);
+        self
+    }
+}
+
+/// spawns a tree defined by a parent map (excluding root)
+/// the parent map must be ordered (parent must exist before child)
+fn spawn_tree(
+    parent_map: &[usize],
+    commands: &mut Commands,
+    update_filter: &UpdateFilter,
+    root_transform: Transform,
+) -> InsertResult {
+    // total count (# of nodes + root)
+    let count = parent_map.len() + 1;
+
+    #[derive(Default, Clone, Copy)]
+    struct NodeInfo {
+        child_count: u32,
+        depth: u32,
+    }
+
+    // node index -> entity lookup list
+    let mut ents: Vec<Entity> = Vec::with_capacity(count);
+    let mut node_info: Vec<NodeInfo> = vec![default(); count];
+    for (i, &parent_idx) in parent_map.iter().enumerate() {
+        // assert spawn order (parent must be processed before child)
+        assert!(parent_idx <= i, "invalid spawn order");
+        node_info[parent_idx].child_count += 1;
+    }
+
+    // insert root
+    ents.push(
+        commands
+            .spawn()
+            .insert(root_transform)
+            .insert(GlobalTransform::default())
+            .id(),
+    );
+
+    let mut result = InsertResult::default();
+    let mut rng = rand::thread_rng();
+    // used to count through the number of children (used only for visual layout)
+    let mut child_idx: Vec<u16> = vec![0; count];
+
+    // insert children
+    for (current_idx, &parent_idx) in parent_map.iter().enumerate() {
+        let current_idx = current_idx + 1;
+
+        // separation factor to visually separate children (0..1)
+        let sep = child_idx[parent_idx] as f32 / node_info[parent_idx].child_count as f32;
+        child_idx[parent_idx] += 1;
+
+        // calculate and set depth
+        // this works because it's guaranteed that we have already iterated over the parent
+        let depth = node_info[parent_idx].depth + 1;
+        let info = &mut node_info[current_idx];
+        info.depth = depth;
+
+        // update max depth of tree
+        result.maximum_depth = result.maximum_depth.max(depth.try_into().unwrap());
+
+        // insert child
+        let child_entity = {
+            let mut cmd = commands.spawn();
+
+            // check whether or not to update this node
+            let update = (rng.gen::<f32>() <= update_filter.probability)
+                && (depth >= update_filter.min_depth && depth <= update_filter.max_depth);
+
+            if update {
+                cmd.insert(Update(sep));
+                result.active_nodes += 1;
+            }
+
+            let transform = {
+                let mut translation = Vec3::ZERO;
+                // use the same placement fn as the `update` system
+                // this way the entities won't be all at (0, 0, 0) when they don't have an `Update` component
+                set_translation(&mut translation, sep);
+                Transform::from_translation(translation)
+            };
+
+            // only insert the components necessary for the transform propagation
+            cmd.insert(transform).insert(GlobalTransform::default());
+
+            cmd.id()
+        };
+
+        commands
+            .get_or_spawn(ents[parent_idx])
+            .add_child(child_entity);
+
+        ents.push(child_entity);
+    }
+
+    result.inserted_nodes = ents.len();
+    result
+}
+
+/// generate a tree `depth` levels deep, where each node has `branch_width` children
+fn gen_tree(depth: u32, branch_width: u32) -> Vec<usize> {
+    // calculate the total count of branches
+    let mut count: usize = 0;
+    for i in 0..(depth - 1) {
+        count += TryInto::<usize>::try_into(branch_width.pow(i)).unwrap();
+    }
+
+    // the tree is built using this pattern:
+    // 0, 0, 0, ... 1, 1, 1, ... 2, 2, 2, ... (count - 1)
+    (0..count)
+        .flat_map(|i| std::iter::repeat(i).take(branch_width.try_into().unwrap()))
+        .collect()
+}
+
+/// recursive part of [`gen_non_uniform_tree`]
+fn add_children_non_uniform(
+    tree: &mut Vec<usize>,
+    parent: usize,
+    mut curr_depth: u32,
+    max_branch_width: u32,
+) {
+    for _ in 0..max_branch_width {
+        tree.push(parent);
+
+        curr_depth = curr_depth.checked_sub(1).unwrap();
+        if curr_depth == 0 {
+            return;
+        }
+        add_children_non_uniform(tree, tree.len(), curr_depth, max_branch_width);
+    }
+}
+
+/// generate a tree that has more nodes on one side that the other
+/// the deepest hierarchy path is `max_depth` and the widest branches have `max_branch_width` children
+fn gen_non_uniform_tree(max_depth: u32, max_branch_width: u32) -> Vec<usize> {
+    let mut tree = Vec::new();
+    add_children_non_uniform(&mut tree, 0, max_depth, max_branch_width);
+    tree
+}
+
+/// parent map for a decently complex humanoid rig (based on mixamo rig)
+const HUMANOID_RIG: [usize; 67] = [
+    // (0: root)
+    0,  // 1: hips
+    1,  // 2: spine
+    2,  // 3: spine 1
+    3,  // 4: spine 2
+    4,  // 5: neck
+    5,  // 6: head
+    6,  // 7: head top
+    6,  // 8: left eye
+    6,  // 9: right eye
+    4,  // 10: left shoulder
+    10, // 11: left arm
+    11, // 12: left forearm
+    12, // 13: left hand
+    13, // 14: left hand thumb 1
+    14, // 15: left hand thumb 2
+    15, // 16: left hand thumb 3
+    16, // 17: left hand thumb 4
+    13, // 18: left hand index 1
+    18, // 19: left hand index 2
+    19, // 20: left hand index 3
+    20, // 21: left hand index 4
+    13, // 22: left hand middle 1
+    22, // 23: left hand middle 2
+    23, // 24: left hand middle 3
+    24, // 25: left hand middle 4
+    13, // 26: left hand ring 1
+    26, // 27: left hand ring 2
+    27, // 28: left hand ring 3
+    28, // 29: left hand ring 4
+    13, // 30: left hand pinky 1
+    30, // 31: left hand pinky 2
+    31, // 32: left hand pinky 3
+    32, // 33: left hand pinky 4
+    4,  // 34: right shoulder
+    34, // 35: right arm
+    35, // 36: right forearm
+    36, // 37: right hand
+    37, // 38: right hand thumb 1
+    38, // 39: right hand thumb 2
+    39, // 40: right hand thumb 3
+    40, // 41: right hand thumb 4
+    37, // 42: right hand index 1
+    42, // 43: right hand index 2
+    43, // 44: right hand index 3
+    44, // 45: right hand index 4
+    37, // 46: right hand middle 1
+    46, // 47: right hand middle 2
+    47, // 48: right hand middle 3
+    48, // 49: right hand middle 4
+    37, // 50: right hand ring 1
+    50, // 51: right hand ring 2
+    51, // 52: right hand ring 3
+    52, // 53: right hand ring 4
+    37, // 54: right hand pinky 1
+    54, // 55: right hand pinky 2
+    55, // 56: right hand pinky 3
+    56, // 57: right hand pinky 4
+    1,  // 58: left upper leg
+    58, // 59: left leg
+    59, // 60: left foot
+    60, // 61: left toe base
+    61, // 62: left toe end
+    1,  // 63: right upper leg
+    63, // 64: right leg
+    64, // 65: right foot
+    65, // 66: right toe base
+    66, // 67: right toe end
+];