What Is the Difference between an Order Book DEX and an AMM-based DEX?
An order book DEX mimics traditional exchanges, using a smart contract to match buy and sell orders submitted by users, requiring liquidity at specific prices. An AMM-based DEX, conversely, uses a smart contract-managed liquidity pool and an algorithmic formula to determine asset prices and execute trades instantly against the pool.
The AMM model is more capital-efficient and simplifies the trading experience.
Glossar
Order Book DEX
Mechanism ⎊ Order Book Decentralized Exchanges (DEXs) represent a fundamental shift in market structure for cryptocurrency and derivative assets, moving away from centralized intermediaries to on-chain, peer-to-peer trading.
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.
DEX
Architecture ⎊ Decentralized exchanges, or DEXs, represent a fundamental shift in financial market structure, enabling peer-to-peer trading of crypto assets without intermediaries.
DEX Model
Architecture ⎊ Decentralized exchange models, or DEX Models, represent a fundamental shift in financial market structure, enabling peer-to-peer trading of crypto assets without reliance on centralized intermediaries.