How Does an RFQ System Differ from a Traditional Order Book on a Crypto Exchange?

An RFQ system provides a direct quote from a market maker, offering a fixed price for a specific trade size, which is not publicly displayed. In contrast, a traditional order book is a public list of all buy and sell orders at various prices, where large orders can suffer from slippage as they consume available liquidity.

RFQs are private negotiations that prevent information leakage and price impact, while order books are transparent and operate on a first-come, first-served basis. This makes RFQs ideal for large or complex trades.