Introducing AlphaDEX (Part 1)

AlphaDEX is an order book exchange on the Radix network. If you would like to follow the project’s progress, join us on Telegram (t.me/alphadex_xrd), follow us on Twitter (@alphadex_xrd) or go to our website (www.alphadex.net)

What is AlphaDEX?

AlphaDEX is a scalable and efficient decentralized order book exchange platform on the Radix DLT network. It aims to provide a central order book and matching engine that can be seamlessly integrated into a wide variety of applications, whether a simple swap widget or a sophisticated trading platform. AlphaDEX seeks to provide a decentralized and non-custodial alternative to the popular centralized exchanges that depend on their clients simply trusting them with their money — a model which is now increasingly met with skepticism.

Why do we call it a platform?

Rather than another DEX with a proprietary app, AlphaDEX can serve as the underlying DEX for many apps, all sharing the combined liquidity and trading volume generated by their users. This creates more efficient trading and pricing for all users. It also allows builders to focus on building apps that best serve their users, without having to generate sufficient liquidity and build a complex order matching engine.

Why an order book exchange?

An order book offer several advantages:

• You can specify the exact price you would like to trade at.

Using limit orders users can specify the exact price they would like to trade at and can even place a trade away from the current market price, knowing that their order will be fulfilled automatically when the market reaches their target price.

• There is no risk of front-running

It is impossible to front-run a trade on an order book as trades that are already on the order book will always be executed before the trades of the front-runner, making the strategy unprofitable to pursue.

• You need less liquidity to avoid slippage — more efficient liquidity

On an orderbook, you could trade $1000 with no slippage as long as there are $1000 (1X your trade) worth of open orders at your specified price. Or you would have 0.5% slippage as long as there are enough open orders to fill your $1000 within 0.5% of your specified price. On a very simplified (xy=k) AMM, you will require a liquidity pool of about 400X your trade ($200 000 in each token) to keep slippage to 0.5%.

• No risk of impermanent loss for liquidity providers

Being able to provide liquidity (place an open order) at a specified price avoids the risk of making an unexpected loss from price movement.

• You can see supply and demand for a pair at different prices

Being able to see orders at various prices gives you a better idea of the overall market view for a pair and at which prices you can expect some resistance to price movement.

Jump to “Introducing AlphaDEX (Part 2)” here: https://medium.com/@alphadex_exchange/introducing-alphadex-part-2-f4747f28e069