CLOBs

CLOB stands for Central Limit Order Book.

Simply put, all centralised exchanges, including those in TradFi, use a CLOB to run their day-to-day trading, i.e., the buying and selling of assets listed on their exchanges.

CLOBs are fast and inexpensive, with low latency and support high transaction volumes. However, until now, creating a fully functional on-chain, decentralised exchange based on a CLOB has been impossible, given that on-chain transactions are not cheap and are limited by execution and data availability constraints.

Hyperliquid broke this barrier. Its performant L1, featuring a customised consensus and data availability mechanism, is designed for one purpose: enabling fast and easy on-chain spot and perpetual order books. Read more (link)

In just two years, Hyperliquid has experienced a significant increase in order and trade volume.

Messari’s researcher defimonk said in his post that Hyperliquid is going to “eat” CEXs.

Needless to say, we have a whole new ecosystem of CLOB-based DEXs now.

This renewed interest and development in CLOB-based.

DEXs has put the limelight back on the importance of fast, cheap, and scalable infrastructure.

With projects varying from running on Solana L1 and alt-L1s to Ethereum L2s and application-specific chains, using either the L1’s own DA or performant alt-DAs like celestia and even an off-chain CLOB fully verifiable using ZK.

CLOB-based DEXs or exchanges generate a lot of data volume, constantly interacting with the state of the order book and executing transactions.

Although fast blockchains like solana provide the necessary execution speed for order transactions that these DEXs want, data availability is the bottleneck.

Tristan from bullet clearly states that improving DA doesn’t seem to be a priority for Solana.

And so did MaxResnick1 from anza_xyz.

Nick White chimed in, explaining why Celestia’s DA could win this “CLOB wars” and why he sees CLOBs coming after blobs.

Celestia is already the most widely used alt-DA solution available, thanks to its massive throughput and low fees, set to improve even further with its upcoming Mamo upgrade.

Hibachi perp is secured by RiscZero’s ZK prover, and leverages Celestia DA. This perp trading app has entered the CLOB war in full force, and we can only brace up for it.

Although there are numerous design options to choose from, with varying opinions on each, one thing is clear: we might see a fully functional on-chain DEX overtaking Binance in the near future.

After the success of HyperLiquid, so many Perp DEXes are waking up to the CLOBs model.

Messari analyst Monk, in his seminal report on CLOBs, presented the CLOB ecosystem map, which will serve as our starting point. As is evident from his map, every blockchain now has CLOBs, which makes sense since CLOBs are just better versions of existing DEXs.

Extended Exchange

Extended is a hybrid CLOB-based trading platform built on ZK rollup Starknet. Founded by the ex-Revolut team, it aims to bring together the worlds of TradFi and DeFi.

Hybrid means that order matching, processing, and sequencing occur off-chain, with final settlement on Ethereum via Starknet, unlike HyperLiquid, which is completely on-chain. A hybrid approach combines the best aspects of both centralised and decentralised design paradigms, as reflected in its end-to-end latency numbers compared to some fully on-chain CLOBs.

Extended app does not want to be another DEX, but it has a much grander vision. It is not just a perp trading platform but also offers lending and borrowing services at the moment and aims to create a system with a single pool of collateral (unified margin) across multiple financial products or trading activities.

Status: Live

BulletX

BulletX is a CLOB-based DEX built on bulletxyz, a network extension (think L2) on Solana specifically designed for performant on-chain trading and DeFi applications.

BulletX also employs a hybrid design, where it offloads transaction processing to its centralised infrastructure and utilises Solana for final settlement and data availability. It is this design that allows for sub-2 second transaction execution

Similar to Extended Exchange, transactions on BulletX are also bundled by a sequencer and verified using the power of zero-knowledge proofs. Status: Testnet

GTE

GTE is an on-chain CLOB DEX built on the megaethlabs layer 2 on Ethereum, utilising EigenDA for data availability.

Unlike the previous two projects, which chose a hybrid design model to achieve CEX-level transaction speeds and latency, GTE is on-chain and relies on the performance of its underlying blockspace, which MegaETH provides.

GTE’s unique proposition as a product is that it covers the entire lifecycle of a token, from TGE to trading, which creates a unified experience for the end user.

Status: Testnet

Hibachi

Hibachi is another hybrid CLOB-based DEX built on Arbitrum L2, promising to bring user privacy to transactions.

Since all transactions happen off-chain, Hibachi ensures verifiability of transaction processing and privacy by:

1.  Encrypting and publishing all related data to Celestia.
2. Using ZK proofs to check that the data does indeed belong to the said transaction

Status: Testnet.

Putting it all together, we see how CLOBs vary in their design choices and product offerings.

With numerous projects in the ecosystem and regular additions, the race to dethrone CEXs is intensifying.

The product that can provide not only tradfi/CEX-level performance but also a web2-style user experience is the magical combination that will win the race. Study them closely.

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