Central Limit Order Book

Status: Planned

TEZEX plans to introduce a central limit order book as part of its longer-term market structure.

Liquidity pools provide an effective foundation for decentralized trading.

A central limit order book, or CLOB, adds a different form of liquidity in which participants specify exact prices and quantities at which they are willing to trade.

Bids, Asks, and Limit Orders

Buy orders form the bid side of the market.

Sell orders form the ask side.

Each order specifies a price and quantity.

This creates visible market depth and allows participants to place limit orders instead of requiring immediate execution against a pool.

Price-Time Priority

Order books commonly prioritize orders first by price and then by the time they were submitted.

This creates a transparent queue in which participants compete to offer stronger pricing.

Professional market makers can continuously place, cancel, and replace orders as conditions change.

Pool and Order-Book Liquidity

TEZEX can support pool-based and order-based liquidity as complementary market structures.

Pools allow passive liquidity provision.

A CLOB allows active market makers to quote exact prices and quantities.

Routing infrastructure can eventually evaluate multiple forms of liquidity when determining how a trade should execute.

How Tezos X Enables an On-Chain CLOB

Order books generate frequent state changes.

Orders are created, cancelled, replaced, partially filled, and fully executed.

Professional market makers may update many quotes as external prices change.

Tezos X provides the throughput and responsiveness required to support this activity at a scale that would have been substantially more constrained in the previous Layer 1 environment.

This enables TEZEX to develop a more active order-based market alongside its pool liquidity.