Exchange types explained: CLOB, RFQ, and Automated, oh my!
Since Hummingbot is an open source bot platform that connects to many different exchanges, we have developed a deep understanding of the nuances between various exchange types.
In this post, we discuss the three main methodologies that digital asset exchanges use to facilitate asset transactions. We hope that this post helps crypto traders and developers choose the right exchange for their needs.
TL;DR
Exchanges perform the fundamental role in free markets of bringing together and coordinating buyers and sellers. Exchanges provide a venue for these parties to discover one another, negotiate and agree terms, and ultimately transact. Exchanges have adopted multiple methodologies to achieve this:
We also discuss the degrees of decentralization of each methodology. CLOB exchanges, as the name suggests, are centralized (even “decentralized exchanges” using CLOB have some degree of centralization) since exchange operators can control the flow of order information and access, whereas RFQ and automated exchanges allow for more or nearly full decentralization.
For the full blog, please visit: Hummingbot Blog: Exchange Types.
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