Coexistence of order book and AMM mode DEX
With the continuous development of blockchain and cryptocurrency technology, the market share of centralized exchanges (CEX) is being swallowed by decentralized exchanges (DEX), especially in this wave of DeFi, the form of the decentralized exchange DEX is also evolving. In addition to traditional DEX, DEX in the form of Swap based on the AMM (automatic market maker) model is emerging. In the current DEX track, there are mainly two types of DEX in the market. Large categories of DEX, namely AMM mode and order book mode.
In the DEX track, the earliest DEX in the order book mode can be called traditional DEX, and the DEX in the form of swap is a new DEX mode that only appeared in this wave of DeFi bull market.
In the history of the development of digital currency exchanges, the earliest model is the order book model. At present, centralized exchanges still use the order book model, which is also called the pending order model. In this model, the buyer and the seller are counterparties to each other. Buyers or sellers can take the initiative to place orders at a price they deem reasonable, and all the orders of buyers and sellers form the exchange's order book. The exchange only acts as an intermediary to match, and the user (buyer or seller) places more orders.
Different from the order book matching model, in the AMM (automatic market maker) model, the counterparty of the user (buyer or seller) is not another user, but a pool of funds. The AMM model is a human-machine transaction model, which does not Like the order book matching mode, the time required for exchange matching is required. AMM's human-machine trading mode is executed immediately, and the transaction price is not controlled by the user. As long as any transaction volume is given, the pool of funds will automatically provide a trading price according to the algorithm. In the DEX of the AMM model, users can be rewarded by providing liquidity to the pool of funds, known as liquidity mining.
The DEX of the AMM model has achieved explosive growth
According to relevant statistics, the annual transaction volume of DEX on Ethereum in 2019 was only 3 billion U.S. dollars. In 2021, the total transaction volume of Ethereum DEX in January has exceeded 60 billion U.S. dollars, which is basically 30 times the 2019 full-year DEX transaction volume. The reason for such a large trading volume is known to all. Among them, the DEX of the AMM model plays a key role.
With the continuous development of DeFi, the DEX of the AMM (automatic market maker) model has achieved explosive growth. Basically, each public chain has its own Swap (AMM model) exchange, and it has gradually become the mainstream model of DEX. For example, Uniswap daily trading volume on Ethereum was second only to Binance, Huobi, and OKEx and now it became the world’s fourth largest cryptocurrency exchange. Pancakeswap on the Binance Smart Chain has achieved tremendous development.
Newdex caters to changes and integrates the AMM model
The great success of the AMM model DEX has also triggered many spontaneous changes in the order thin model DEX. Take Newdex on the EOS chain as an example. Its development process has also witnessed the transformation of the DEX model.
Newdex was launched in August 2018, that is, two months after the EOS mainnet was officially launched. It developed with the development of the EOS public chain. As we all know, compared with other public chains, EOS public chain The chain is not only fast, but the transfer fee is also very low, even free. Relying on the performance of the EOS public chain, Newdex provides us with a DEX transaction experience of matching and settlement on the chain. At the time, it was very in line with decentralization .
When trading at Newdex, not only does it require no registration and KYC, but the EOS wallet connection can be used for trading, and the relevant contract account adopts the EOS multi-signature model. The Newdex project party cannot unilaterally transfer the assets in the contract or modify the contract code. It provides security for users' digital assets, and therefore becomes the leading DEX exchange on the EOS chain.
However, after the rise and explosion of the AMM model DEX, it has had a great impact on the traditional order book model DEX, especially in the AMM model, users can not only be DEX users, but also can be DEX "shareholders" , Share DEX transaction fees by providing liquidity for the Swap pool.
After the AMM model of DEX (such as Defibox) broke out, Newdex also actively catered to the changes, and launched aggregate trading in December 2020.
The innovation and advantages of aggregate trading
Newdex's aggregate transaction is to aggregate the traditional order book model and the AMM model Swap pool. These two models have complementary advantages. For users, the transaction depth has become significantly better, and Newdex user experience has been significantly enhanced.
After Newdex integrates the order book matching mode and the AMM fund pool mode, users can not only enjoy the convenience of the AMM mode, as long as they select the corresponding transaction pair and enter the amount to be exchanged, the transaction can be completed quickly, that is, the human-machine transaction. For users who want to quickly complete the exchange transaction, the AMM model is very convenient, especially when the market is volatile, you can use the AMM model to quickly lock in gains or reduce losses. Moreover, you can also enjoy the convenience of the traditional order book model, that is, users can conduct pending orders at a price specified by themselves according to their own judgment on the market.
The depth of the trading pairs of Defibox have been aggregated into the Newdex exchange, and the trading prices will be better while maintaining the experience of decentralized products. The system will even automatically calculate the optimal transaction for the user according to the algorithm, such as splitting the user’s order, one part uses the AMM mode, the other part uses the order book mode, or part of the transaction volume is completed by Defibox, and the other part The transaction is completed by Swap fund pool.
Although Newdex has long been famous on EOS, the cruel fact is that when we talk about Dex liquidity in the broad market, the data sources are ETH and BSC because the circulation of assets on EOS, is not rank among the big streams. In today's environment, going out of the circle is an eternal topic.
