Orderbook DEXs: the next exit for crypto?



  • 3 major types for orderbook dex: rollup-based, fully-onchain, high-perf

  • dydx v4, hyperliquid, vertex, aevo, orderly, apex are doing some interesting new developments in this space

  • security, convenience to existing exchanges and GTM strategies are the things that matter most for orderbook dex exchanges.

1/ Landscape

There are many orderbook exchanges. Understanding them involves grasping a performance-decentralization trade-off (the diagonal); increased performance implies more centralized design. Here's breakdown:

- CEX: Max performance, highly centralized (@FTX_Official)
- fully on-chain: Max decentralization, performance-limited; unfit for orderbook due to high gas fees (@GMX_IO)
- roll-up based: Off-chain orderbook for performance; settlements handled on-chain in batches for security & lower gas fee (@dYdX v3, @zkLinkorg @OrderlyNetwork)
- high-perf chain: A tailored chain to cater to the high-performance demand of the orderbook (@dydx v4, @Injective_, @vegaprotocol, @SeiNetwork)

As for metric comparison, I recommend @DefiLlama: https://defillama.com/protocols/Derivatives

2/ Interesting developments you might have missed

2.1 @dydx

v4 launch coming soon (Q3?). I admire their daring vision of creating a fully decentralized, performant exchange, which is fully open-sourced.

2.2 @HyperliquidX

A high-performance chain that seems to be developing faster than dydx πŸ˜‚ (mainnet now)

- all actions are on-chain, for example, https://app.hyperliquid.xyz/explorer/address/0x63c621a33714ec48660e32f2374895c8026a3a00
- no gas for orders, curious about their DDoS defense πŸ€”

2.3 @vertex_protocol

one of the most feature-rich rollup-based orderbook DEX
- combines orderbook & AMM (Better composability?)
- on-chain risk management (no more liquidation by hayes πŸ˜‚)
- unified margin across spot, perps & money markets

2.4 @aevoxyz

options + perp + otc; a first in the market; provides portfolio margin with strong backing from @ribbonfinance, @paradigm. They've executed very well since launch

2.5 @OrderlyNetwork

offers trading-infrastructure-as-a-service, a different go-to-market strategy. Building an orderbook DEX is challenging; if Orderly simplifies it, we may see some amazing growth similar to GMX, but strong security is also needed.

2.6 @OfficialApeXdex

while dydx has moved away from starkex, ApeX is still building on it w/ good improvs
- cross-chain deposit (eth, bsc, arb, polygon, op, avax)
- smart lp
- app
- referral

might be the most user-friendly orderbook dex atm.

2.7 @StorkOracle

A new oracle infrastructure. There're many oracles, but few see meaningful adoption outside their token πŸ˜‚. And yet, Stork is adopted by @vertex_protocol and @OfficialApeXdex, as orderbook requires a faster oracle; love to see how they'll grow in future.

3/ What matters for adoption?

Due to my personal exp, I get asked a lot on what features matters for exchange adoption 🀣. exchange has innovative designs, but few gain traction. Here are my thoughts:

3.1 Security

How secure can a DEX be? My fav example is @zkLinkorg; it shows even when it is down, funds are still safu. While many DEX claim they're safe, but in reality not, campaigns like this are proof-of-security and make good players stand-out.

3.2 Low Cost & Convenience

Can users deposit from multiple chains? What's the order placement cost? How about fees, rewards, and rebates? Since users mostly come from existing exchanges, orderbook DEXs must offer a similar UX to encourage migration.

3.3 Go-To-Market Strategies

While product features are often discussed, they alone don't ensure success. Why is @dydx v3 the biggest among multiple exchanges built on StarkEx, despite having similar features?

To some extent, exchange is a network product (like twitter, fb) and liquidity is a cold-start problem. How to bootstrap liquidity? Choose perps vs. spot? How to stand out from competitors? @Bybit_Official and @bitgetglobal are good case studies if you're familiar with their journeys.

I'll leave a chart w/o comment πŸ˜‰


4/ Future

We've seen remarkable progress in this space compared to the last cycle. I believe the journey doesn't stop here. Hats off to the teams shipping during the bear market, hoping we can finally free ourselves from figures like SBF and Gary πŸ˜….

And that's it, thanks ... for feedback

and feel free give any advice, or point out any error or things I missed.

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