Author: ZK Zhao, crypto KOL; Translation: Golden Finance xiaozou
Key points of this article:
There are three main types of Orderbook DEX: rollup-based, full-onchain, and high-perf.
dYdX v4, Hyperliquid, Vertex, Aevo, Orderly and ApeX are doing some interesting new developments in this area.
For Orderbook DEX, security, convenience of existing exchanges and GTM listing strategy are the most important.
1. Orderbook exchange structure
There are many Orderbook exchanges. To understand them deeply is to understand the trade-off between performance and decentralization; higher performance often means more decentralized design. The details are as follows:
- CEX centralized exchange: has the highest performance, but is highly centralized (such as FTX).
- Complete on-chain mode: The highest degree of decentralization, but limited performance; due to high gas fees, it is not suitable for orderbook (such as GMX).
- Based on rollup: has the performance of off-chain orderbook; in order to obtain security and lower gas fees, batch settlement is performed on the chain (such as dYdX v3, zkLink, Orderly Network).
- High-performance chain: a customized chain (such as dYdX v4, Injective, Vega Protocol, Sei Network) to meet the high-performance requirements of orderbook.
2. Interesting development and construction
（1）dYdX
v4 is about to be released (maybe in Q3?) and I admire their ambitious vision to create a high-performance exchange that is fully decentralized and open source.
（2）HyperliquidX
HyperliquidX is a high-performance chain that seems to be developing faster than dYdX (now launched on mainnet).
- All operations are on-chain operations.
- There is no gas fee for orders and I am curious about their DDoS defense.
（3）Vertex Protocol
Vertex is one of the most feature-rich rollup-based orderbook DEX.
- Orderbook combined with AMM.
- On-chain risk management.
- Unified spot, perpetual futures and money market margin.
(4) Age
Aevo's "options + perpetual futures + OTC" model is a market first; it provides portfolio margin with the strong support of Ribbon Finance and Paradigm. Aevo has performed very well since its launch.
（5）Orderly Network
Orderly offers a distinctive go-to-market strategy - trading-infrastructure-as-a-service. Building an orderbook DEX is very challenging. If Orderly simplifies this process, we could see astonishing growth similar to GMX, but with the need for strong security.
（6）ApeX Protocol
Although dYdX has moved away from StarkEx, ApeX is still running on StarkEx with good improvements and optimizations.
- Cross-chain deposits (eth, bsc, arb, polygon, op, avax)
-Intelligent lp
- app
- recommend
ApeX is probably the most user-friendly orderbook DEX ATM.
（7）Stork Oracle
Stork is a new Oracle infrastructure. There are many oracles, but few have seen any meaningful adoption beyond tokens. However, Stork gained adoption by Vertex and ApeX because orderbook required a faster oracle. Looking forward to seeing how they develop in the future.
3. Important features that drive adoption
From my personal experience, I am often asked: what features are critical for exchange adoption? There is no shortage of innovative designs in exchanges, but few gain traction. Here are some of my thoughts:
(1) Security
How safe can DEX be? One of my favorite examples is zkLink. zkLink stated that its funds are still safe even when the servers are shut down. Although many DEXs claim that they are safe, in fact they are not, but security testing activities like zkLink are good proof of security and allow good players to stand out.
(2) Low cost and convenience
Can users deposit on multiple chains? How much does it cost to place an order? What about fees, incentives and rebates? Since users mostly come from existing exchanges, orderbook DEX must provide a similar user experience to encourage users to migrate.
(3) Listing strategy
Although product features are often discussed, features alone do not ensure a product's success. Why is dYdX v3 the largest of the multiple exchanges running on StarkEx, despite similar functionality across exchanges?
To the extent that an exchange is a network product (just like Twitter and Facebook), liquidity is a cold start problem. How to guide liquidity? Choose perpetual futures or spot trading? How to stand out from your competitors? For example, Bybit and Bitget Global are good case studies if you are familiar with their development journey.
4. Future prospects
We have seen significant progress in the orderbook DEX space compared to the previous cycle. I believe the field will not stop here. Here, I pay tribute to the team that developed and built during the bear market, and hope that we can finally get rid of the shadow of SBF and Gary.