High-Frequency Trading
Status: Planned
TEZEX plans to support increasingly sophisticated automated and high-frequency trading as the execution environment of Tezos X matures.
High-frequency trading broadly refers to automated strategies that respond rapidly to changing prices, liquidity, and order flow.
These systems can perform important market functions, particularly market making and arbitrage.
Market Making
Section titled “Market Making”Professional market makers continuously offer prices at which they are willing to buy and sell assets.
As markets change, those quotes need to change with them.
Faster execution allows market makers to adjust pricing and inventory with less exposure to stale market conditions.
Competition among market makers can contribute to tighter spreads and stronger effective liquidity for other users.
Arbitrage
Section titled “Arbitrage”The same asset can trade at different prices across pools, applications, execution interfaces, and external markets.
Automated arbitrage systems identify those discrepancies and trade against them.
This helps keep related markets aligned and strengthens price discovery throughout the ecosystem.
How Tezos X Enables HFT
Section titled “How Tezos X Enables HFT”High-frequency strategies require both rapid information and rapid execution.
Tezos X provides a substantially more responsive environment in which automated systems can:
- receive market information quickly;
- update quotes more frequently;
- react to arbitrage opportunities;
- rebalance inventory;
- and execute strategies at higher frequency.
Cross-runtime composability also expands the set of markets that automated systems can evaluate within Tezos.
Programmatic Access
Section titled “Programmatic Access”Supporting professional automated participants requires infrastructure designed for software.
TEZEX plans to provide increasingly robust:
- market-data feeds;
- streaming updates;
- trading APIs;
- transaction submission;
- execution information;
- and liquidity data.
These capabilities can support market makers, arbitrageurs, routers, automated portfolio strategies, and other professional participants.
The result can be greater utilization of Tezos liquidity and more efficient markets.