A First Look at Paradex
An ERC20 exchange launching mid-November
Before we get to the good stuff, we’d like to start by saying we’re flattered and humbled by the excitement & interest that followed our first announcement.
While our team is heads-down fine-tuning and adding finishing touches to Paradex (fueled by your encouragement and copious amounts of coffee), we wanted to share a first-look at our upcoming exchange platform and some of its features.
We believe users shouldn’t have to sacrifice traditional trading features for security. Unfortunately, until Ethereum block times scale, we feel that a professional, real-time trading experience isn’t quite practical (at least not yet) in a 100% decentralized system.
Our team saw an opportunity for a pragmatic and hybrid solution, opting to decentralize the most security-critical components of an exchange, while relying on the speed and scalability of a traditional, off-chain architecture for everything else. The result is an off-chain order book and order matching system that’s scalable and responsive, which in turn handshakes with a web3-enabled wallet for order signing, ultimately submitting a signed, matched order to the 0x smart contract for settlement.
The Paradex solution allows us to overcome frustrating hurdles like order book contention and isolate ourselves from blockchain deficiencies like slow settlement processing, giving users a snappy trading experience that doesn’t sacrifice speed, functionality or security.
Married to our off-chain order book is a robust order matching engine that attempts to emulate those of traditional exchanges. Our matching engine offers true limit orders, price/time priority (P/TP), fully asynchronous trading (users won’t have to manually pick orders off the book), as well as front-running prevention and a low rate of settlement failures, both of which are common issues of existing DEXs.
Looking at limit orders specifically, this means that we can fill an order at a given price or better. We achieve this by matching orders (ranked by P/TP) at cost and refunding the arbitrage as a price rebate when it becomes advantageous to the trade.
Furthermore, our matching engine allows for placing an order that can trigger both takes and a make with a single signed transaction. For example, if two outstanding sell orders for 500 ABC each are on the book and another user wants to buy 1500 ABC, our engine will simultaneously take both 500 orders and make a buy order on the book for the remaining 500 ABC.
We’ll be taking a closer, in-depth look at our order matching engine and underlying architecture in a later post.
More details to come as our November mainnet debut gets closer. Follow us on Twitter to be the first to learn more.
We’re looking for additional partnerships with market makers and liquidity providers, as well as collaborators interested in using our trading and market data API. Connect with us at email@example.com.
We’re also on the hunt for an experienced DevOps engineer with significant linux and production service deployment chops. Click here for additional details.