Evolution of Orderbook

The Evolution of orderbook section will explore the history and development of the orderbook.

Orderbook

For a specific financial instrument, such as a stock or cryptocurrency, an orderbook is a list of buy and sell orders. Information on the prices and quantities that buyers and sellers are willing to deal with is contained in the orderbook. The exchange matches orders, matching buy orders to sell orders at the same or a higher price. Due to its transparency and ability to facilitate price discovery through trades between buyers and sellers, the orderbook is a crucial part of trading platforms.

Evolution of Orderbook

The Orderbook has been a fundamental component of trading platforms for decades. The evolution of the orderbook has been driven by advances in technology and changes in market conditions. We divide it into three phases: Traditional orderbook, Current orderbook, and Future orderbook.

The Orderbook in a traditional orderbook is a list of buy and sell orders for a specific asset, with each order indicating the price and quantity the buyer or seller is willing to trade. Electronic orderbooks have replaced physical trading floors due to technological advancements, increasing the speed and efficiency of order matching on modern centralized exchanges for stocks and cryptocurrencies. Although there are some significant differences, decentralized exchanges have also adopted the orderbook format. In decentralized exchanges, each node has a copy of the orderbook that is stored on a blockchain or peer-to-peer network. As a result of having access to the same data, every node has greater transparency and a lower risk of manipulation. However, there are still some concerns about high fees and delayed matching operations.

Recently, new types of orderbooks have emerged, such as automated market makers (AMMs) and hybrid orderbooks, which are clarified as the Current orderbook phase. AMMs use algorithms to determine the price of an asset based on the supply and demand of the market, eliminating the need for a central authority to set prices. Hybrid orderbooks combine the benefits of centralized and decentralized orderbooks, providing faster order matching while maintaining security. However, since some parts of the system operate off-chain, there are still concerns about transparency.

The purpose of CrestsX, as a future orderbook, is to resolve the challenges associated with the present orderbook system, such as exorbitant fees for traders, fraudulent activities by intermediaries, and inadequate asset control. By incorporating the CrestsX mechanism, traders gain from reduced fees, total control over their assets, and increased transparency and security. Our objective is to establish an orderbook system that is efficient, dependable, and advantageous to all traders.