The corner of the blockchain and crypto world known as decentralized finance (DeFi) aims to offer everyday users a fast, simple and intuitive way to buy and sell tokens, trade futures contracts, and move assets across multiple networks with ease.

Targeting the weaknesses of monolithic financial apparatus that make up the world of centralized finance (CeFi), DeFi aims to address high latency, slow speeds, and complex usability, giving people the chance to permissionlessly interact with novel protocols and apps.

But for developers taking that first step into creating decentralized trading protocols, they must first choose from a range of potential infrastructure solutions — each offering its own set of benefits and weaknesses.

Major technical and operational hurdles such as liquidity sourcing and management, trading functions, latency, speed and slippage issues, as well as cross-chain functionality, must be considered by upstart developers when choosing the technical foundations upon which their protocols will be built.

Orderbook-Based Platforms Vs Automated Market Makers

Orderbook-based infrastructure providers differ significantly from their automated market maker (AMM) counterparts like Uniswap, SushiSwap, PancakeSwap. For a start, they offer a more professional and efficient user-experience akin to that offered by centralized exchanges — without sacrificing the low latency, high speeds and privilege of self-custody delivered by DeFi.

While AMMs use a mechanism whereby prices are calculated algorithmically and tokens are derived from liquidity pools, orderbook-based platforms match buyers directly with sellers, utilizing market makers and liquidity providers to maintain a healthy market.

While holding billions of dollars in assets under management, popular automated market makers like Uniswap still lack the range of in-depth, professional trading options that can be found on orderbook-based platforms like Coinbase, Binance and other CEXs.

For this reason, AMMs struggle when it comes to securing the trust of professional and institutional traders who demand access to not only a wide range of trading strategies, but also transparency, tight spreads, deep liquidity, low latency, self-custody of assets, and 100% guaranteed uptime.

Additionally, one of the most crucial ongoing developments in the cryptocurrency and DeFi space is the quest to enable a truly cross-chain ecosystem, where assets can be traded seamlessly across multiple, disparate blockchains, without requiring the use of risky cross-chain bridge protocols. 

Bridge protocols have proved to be the Achilles heel of multiple DeFi platforms in recent years, and were responsible for the theft of over $3.2 billion in 2022 alone. 

The native ability to execute cross-chain trades across a wide range of networks is key to creating an interconnected DeFi landscape, and upcoming trading platforms will be obliged to utilize technical infrastructure which supplies this functionality as standard.

DeFi Lego: By Developers, For Developers

With the future of DeFi in the balance, infrastructure providers are now looking to bridge the gap between the centralized financial marketplace and the decentralized one; between freedom and security; complexity and functionality.

To this end, some DeFi infrastructure providers are foregoing the usual route of building and promoting their own front-end in favor of dedicating their resources to the creation of back-end infrastructure that developers can use to build their own platforms.

One example is the back-end only, orderbook-based infrastructure platform Orderly Network. The Orderly technology stack is designed to enable the creation of decentralized exchanges that offer CEX-like performance, while respecting foundational DeFi principles like self-custody, on-chain settlement, modularity, and multi-chain — or omnichain — functionality.

Dubbed “the ultimate DeFi lego for developers,” Orderly has no front-end, allowing it to focus on the construction of fully modular, plug-and-play tools teams can use to build DEXs that wield the same instinctive user-interface and user-experience of leading CEXs.

Built on the NEAR blockchain, Orderly’s toolkit can be used on both EVM (Ethereum Virtual Machine) and non-EVM networks, enabling users to execute both spot and perpetual futures trades on assets from different blockchains, all from the same orderbook.

Orderly’s infrastructure can support a swathe of DeFi applications, from DEXs to trading desks and algorithmic trading bots; it can also be used to integrate essential DeFi services by wallet and custodian apps, as well as games and dApps.

The Race to Build the Future 

Orderly joins a number of forward-thinking projects seeking to provide the technological backbone of the future of DeFi. The Ethereum-based 0x Protocol has a similar focus on orderbook-based, back-end solutions, as do other projects such as Loopring, Injective Protocol, and Serum.

One thing connecting all of these orderbook-based projects is their ambition to bring the smooth, trusted, transparent experience of centralized exchanges to their decentralized counterparts, without sacrificing any of the autonomy that’s representative of the DeFi space.

With so many options on offer, orderbook-based developers have a wealth of choice when it comes to selecting the infrastructure provider for their DeFi projects.