Order Books: Why On-chain
The on-chain order book is an essential infrastructure that will pave the way for the next era of DeFi. Limit orders can convert demand for trades that do not require immediate settlement into genuine liquidity. Because it operates with a distinct set of motivations compared to liquidity provision in AMMs, it can supplement the liquidity of the DeFi ecosystem to reach new heights.
Markets such as options and futures that were previously challenging to implement with AMMs alone can now be made possible through the more generalized trading system provided by the order book. Additionally, matching orders based on price-time priority promotes fairer and more MEV-resistant trading. As the on-chain order book will serve as a foundational element for many DeFi projects, it must be designed to be a neutral and permissionless protocol for all.
The Problem with DEX Incentives
Generally, there are operators and beneficiaries of a decentralized exchange platform — regardless of its decentralization. For instance, while UniSwap is a decentralized and immutable protocol, its community and core team have put in significant effort to achieve its current market dominance. They are potential beneficiaries of the future profits generated.
However, this creates a problem as the UniSwap core engine, as a technical innovation, is not differentiated from the DEX platform. This means that those who wish to leverage the core mechanism of UniSwap to build their own platform cannot align their interests with the protocol, leading them to fork the protocol and deploy it as a separate contract, not contributing to the original protocol.
Clober SDK — On-chain Order Book as a Service
To address such issues, we have detached our core engine, Clober SDK, based on the LOBSTER algorithm, from our platform, designing it as an entirely neutral and independent infrastructure protocol. The Clober SDK is an on-chain, Software as a Service (SaaS) protocol that enables anyone to create their own LOBSTER algorithm-based on-chain order book market and generate revenue from it.
Any third-party builder can easily create custom order book markets through interaction with the Clober SDK contract permissionlessly and become the Host of the markets. 80% of the fee revenues generated from markets created using the Clober SDK are paid to their Hosts, and the remaining 20% goes to the Clober protocol, which is used to promote sustainable development.
Consequently, unlike other DEX protocols, those seeking to build their platforms based on Clober’s technology can contribute to the protocol as ecosystem members while generating profits for themselves.
Website: https://clober.io
Discord: https://discord.gg/clober
Telegram: https://t.me/CloberDEX
Medium: https://medium.com/clober
Twitter: https://twitter.com/CloberDEX
