What Is a Fragmented Order Book in Cryptocurrency Exchanges?
A fragmented order book means that the total liquidity for a single cryptocurrency asset is scattered across multiple, independent exchanges. Instead of one deep, centralized pool of bids and asks, traders must consult several smaller, shallower order books.
This fragmentation reduces the effective liquidity available on any single exchange, leading to wider bid-offer spreads and less efficient price discovery.
Glossar
Regulatory Oversight
Jurisdiction ⎊ Regulatory oversight within cryptocurrency, options trading, and financial derivatives is fundamentally defined by jurisdictional boundaries, impacting enforcement and cross-border transactions.
Order Book
Depth ⎊ An order book represents a listing of buy and sell orders for a specific cryptocurrency, option contract, or derivative, displaying price and quantity at various levels.
Total Liquidity
Liquidity ⎊ Total liquidity represents the aggregate amount of capital available to facilitate trading across all order books and automated market maker (AMM) pools for a specific crypto asset or its derivatives, such as options and perpetual futures.
Fragmented Order Book
Structure ⎊ A Fragmented Order Book refers to the state where the collective limit orders for a specific crypto asset or derivative are not centralized on a single exchange but are instead distributed across numerous, independent trading platforms.