Hybrid CLOB + AMM Model
Traditional central limit order books (CLOBs) and automated market makers (AMMs) each bring distinct strengths and weaknesses to decentralized perpetual exchanges:
CLOBs: Efficient price discovery, tight spreads, and better capital efficiency — but they rely on active market makers and can struggle with thin liquidity in long-tail markets.
vAMMs: Always-on liquidity and permissionless participation — but they often suffer from higher slippage, impermanent loss, and less capital efficiency.
A hybrid model integrates both:
AMM pools provide baseline liquidity that guarantees users can always enter or exit positions.
CLOBs allow professional market makers and active traders to place limit orders, tightening spreads and improving depth.
The system can route trades dynamically: small orders get filled against the book for optimal pricing, while large trades tap into AMM reserves to reduce slippage.
In this model, the order router intelligently prioritizes liquidity sources:
CLOB Liquidity First
Orders are matched against the central limit order book whenever possible.
This ensures traders get the best available price, with minimal slippage, while incentivizing professional market makers to provide depth.
AMM as Always-On Backup
If the CLOB cannot fully fill the order (e.g., large size or thin liquidity), the router automatically taps into the AMM pool.
This guarantees trade execution, even in illiquid or volatile markets, with predictable pricing from the pool.
Dynamic Routing & Price Improvement
Partial fills can be split: best price levels from the book first, then the remainder settled against the AMM.
This dual-source routing provides price improvement for traders while ensuring continuous market availability.
Benefits
Efficiency: Tight spreads and competitive pricing from CLOB market makers.
Reliability: AMM ensures no failed trades, acting as a safety net.
Capital Access: Retail LPs can passively provide liquidity via the AMM, while professional market makers compete on the order book.
Scalability: Supports both high-volume markets (CLOB dominant) and long-tail assets (AMM reliant).
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