In the rapidly evolving realm of DeFi, decentralized exchanges (DEXs) stand as a cornerstone, enabling seamless transactions in a trustless environment.
At the heart of these exchanges lies the mechanism of order matching, a crucial process that pairs buyers with sellers, facilitating the exchange of assets. Traditionally (on order book-based exchanges), order matching has been centralized, with a single entity overseeing the process to ensure efficiency and accuracy.
However, the advent of blockchain technology has paved the way for decentralized order-matching systems, promising to align DEXs with the ethos of decentralization further.
Centralized and decentralized order batchers are central to this discussion, each representing a different approach to order matching.
Understanding centralized order matching
Centralized order matching operates under the aegis of a central authority that oversees the matching of buy and sell orders. This setup collects orders within a defined time frame and batches them together. Once the batch is complete, a centralized matching engine sifts through the orders, pairing buyers with sellers based on predefined criteria such as price and time of order placement.
Advantages
- Efficiency: The centralized nature of…
