Three Of The Best Orderbook-Based DEX Platforms For Crypto Traders
DEX platforms first emerged in the last decade as a solution to the crypto industry’s reliance on centralized exchanges, which bring unnecessary risks for digital asset enthusiasts. The problem of CEXs is that they require users to deposit their funds within their own wallets, meaning users have to entrust them with their crypto. This goes against one of the fundamentals of crypto itself.
DEXs solve this risk because they’re non-custodial, meaning users aren’t required to give up control of their funds. The very first DEXs to emerge were based on Automated Market Maker algorithms that facilitate peer-to-peer trading among the platform’s users, yet these mechanisms are somewhat unfamiliar to many users, impacting the overall experience.
More recently, a new generation of orderbook-based DEXs have emerged that provide a traditional user interface, with chart candlesticks and orderbook patterns simplifying the user experience. Orderbook-based DEXs also help to improve the liquidity of such platforms, as they display market prices more clearly and can support larger orders. This means reduced slippage that can negatively impact user’s trades.
Orderbook DEXs essentially bring the superior user experience of CEX platforms to the world of decentralized trading, and a number of platforms have emerged. Of course, each one has its own strengths and weaknesses in terms of trading experience, security, complexity and liquidity. So let’s take a closer look at three of the best Orderbook-based DEXs to see how they compare.
OraiDEX
Created by the AI-based blockchain infrastructure provider Oraichain, OraiDEX is built using CosmWasm-based smart contracts and embodies the principles of “CeDeFi”, which is the term for the fusion of centralized and decentralized finance. Oraichain designed its DEX platform to provide a truly distinctive user experience, with advanced features including multichain interoperability, super-fast swaps and a vast range of liquidity options to minimize slippage and support large trading volumes.
OraiDEX was originally based on an AMM mechanism before transitioning to an Orderbook model that supports multiple blockchains. It also provides an array of tools for more advanced trading strategies, with key innovations such as Universal Swap, Perpetual Futures and GPU Staking setting it apart from rival platforms.
One of the most recent additions to the platform was Perpetual Futures, which allow traders to speculate on digital asset prices without an expiration date, unlike conventional futures trading, where contracts have an expiry date.
Other capabilities that differentiate OraiDEX include its built-in token bridging capabilities, which allows simple swaps between networks such as Binance Smart Chain, Tron, Injective, and Ethereum. It also integrates with IBC chains within the Cosmos ecosystem, meaning trustless communication between ORAI, ATOM, LUNA, CRO and UST, for example. Streamlined liquidity provision and profitable yield farming provide further utility to users, and there’s even an NFT bridge.
OraiDEX is also focused on enhancing the utility of its native ORAIX token, and these days it is difficult to find a DEX token with more use cases. In addition to regular staking, OraiDEX supports something called MetaStaking, which is a special program for ORAIX and ORAI holders who are delegating ORAI on the mainnet and staking ORAIX on OraiDEX.
More recently, Oraichain has proposed a novel “GPU Staking” mechanism, which leverages demand for its blockchain-based AI network’s computing power to increase the utility of ORAI. GPU Staking, if approved by the community, will enable users to restake their scORAI tokens, which is the network’s liquid restaking token, to earn additional rewards in USDC. The rewards will come from dApps that pay to access Oraichain’s GPU infrastructure, meaning that the entire community can benefit from the growth of its network.
OraiDEX is set to become even more powerful with the recent launch of Oraichain’s OraiBTC Subnet, which acts as a decentralized bridge to the native Bitcoin network. With OraiBTC, users can bring their BTC tokens into the Oraichain ecosystem, meaning more trading opportunities for OraiDEX.
All told, it’s hard to find a DEX platform that combines the familiarity of CEX-style trading with the security and functionality of DeFi. With OraiDEX, users can enjoy a seamless trading experience on a platform that prioritizes user choice, control and security.
OraiDEX has seen rapid traction in recent months at a time when the overall Oraichain ecosystem is growing with the rising demand for AI applications and services. As Oraichain’s network grows, it naturally brings more users to its flagship DEX platform.
Polkadex
Founded in 2020, Polkadex was one of the very first DEX platforms to leverage a peer-to-peer Orderbook model. The DEX is built on Substrate, the same framework that underpins the Polkadot ecosystem, and provides fast, secure and low-cost trading for a vast range of digital assets. By leveraging Polkadot’s infrastructure, Polkadex is highly scalable, enabling it to support some of the highest trading volumes in the DEX industry while ensuring a simple experience for users.
The Polkadex platform is available through web and mobile apps, and it supports tons of novel features that cannot be found on other DEX platforms. For instance it’s one of the few DEXs to support automated trading bots, and one of the first Polkadot-based exchanges to offer a seamless bridge between Ethereum and Polygon. It also supports derivatives trading and structured products for professional and institutional traders.
Perhaps the most novel aspect of Polkadex is the way it merges the AMM model with the Orderbook model pioneered by traditional exchange platforms, which essentially makes it a hybrid platform.
Because it still uses an AMM under the hood, Polkadex can maintain deep liquidity and enable the trading of assets without direct counterparties. However, the Orderbook model allows users to place orders to buy or sell digital assets at a specific price, on the understanding that their order will go unfulfilled if no counterparty matches it. This ensures users have more control over their trades, if they want to. Users therefore benefit from the advantages of both trading models.
Interoperability is another key strength of Polkadex, which it achieves by leveraging the power of the extensive Polkadot network, which is essentially an ecosystem of standalone blockchains. Because Polkadot’s chains are all interconnected, users can easily trade assets across them with the benefit of concentrated liquidity.
Polkadex boasts that its unique model means more transparency for traders and improved price discovery, as supply and demand are determined by market forces. That’s more transparent than AMMs, which rely on complicated algorithms to determine the prices of assets with questionable accuracy. In addition, Polkadex always displays all open orders, including the price and quantity of each order. Users can therefore see that orders are executed fairly and in good time, meaning greater trust in the platform.
Polkadex is another example of a DEX platform that’s benefiting from the overall growth of its broader ecosystem, with Polkadot notably showing significant growth in recent months.
D5 Exchange
A more recently established player in the Orderbook DEX scene, D5 Exchange made its debut in March 2023. Like OraiDEX and Polkadex, it aims to combine aspects of CEX and DEX trading, utilizing both an Orderbook and AMM model to power its trading experience.
D5’s on-chain Orderbook means that all orders placed by its users are stored on the blockchain, eliminating the need for external servers to store transactions and improving transparency. D5 is powered by the Gridex Protocol, which provides the underlying Grid Order Maker Book infrastructure that enables instantaneous swaps of ERC20 tokens. This architecture allows it to aggregate liquidity from both its internal liquidity pools and also external sources, such as DEX platforms like Uniswap and Curve.
Like OraiDEX and Polkadex, D5 is fully decentralized and non-custodial, meaning that users simply connect their wallet to the platform so they can retain full control of their funds. D5 claims that it provides benefits such as low costs compared to other DEXs, with some of the highest order fill rates in the industry and rapid transaction finality by leveraging Layer-2 networks such as Optimism and Arbitrum.
D5’s Orderbook model allows it to provide a higher level of price transparency and accuracy for users with a more seamless trading experience. This translates to greater user confidence in the platform, with superior price discovery and swap flexibility. Moreover, the external liquidity ensures that most orders can be fulfilled in seconds, even large volume trades. D5’s mission is to deliver an easier, fairer and more competitive decentralized trading experience for users, and that is something it has easily achieved.
The Future Of Decentralized Trading
The rising popularity of Orderbook-based DEX platforms like OraiDEX, Polkadex and D5 Exchanges shows how the world of decentralized trading is evolving and becoming more advantageous for traders. Such platforms claim notable advantages over AMM-based DEXs, with superior price discovery mechanisms, greater liquidity, more transparency and a better user experience. It’s no wonder that a significant and growing number of crypto traders are flocking to these venues.
Because Orderbook DEXs offer these benefits, they’re attracting more users from traditional CEX platforms, increasing the amount of liquidity in the broader decentralized trading environment, which is advantageous for every DEX trader. Users can enjoy a more familiar trading experience while retaining control of their digital assets, without being hindered by the complex nature of the earliest DEX platforms.
By leveraging an Orderbook model, DEX platforms are evolving and becoming more sophisticated, matching the capabilities of the best CEX platforms. At the same time, they can offer more trust than is possible with any CEX exchange. It’s a winning combination and it’s one that will power increased adoption and innovation in the DEX industry for some time to come.
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