Decentralized exchanges (DEXs) have disrupted the cryptocurrency trading landscape by introducing trustless and transparent platforms for exchanging digital assets. A critical element of DEXs is the order matching mechanism, which enables the execution of trades. This blog post delves into the intricacies of order-matching mechanisms, highlighting the advancements that have enhanced user efficiency, liquidity, and overall trading experience.
Illiquid Marketplaces is a common problem with various underlying factors. Information asymmetry, where one party has more knowledge than the other, makes it challenging to establish agreements and facilitate transactions. Complex market structures, with intricate trading rules or inadequate infrastructure, can hinder liquidity. Small marketplaces with fewer users naturally have less liquidity. Fragmented marketplaces, where sellers impose rigid terms, create barriers for potential buyers.