This article was first published on 0x Blog - Medium
The first DeFi liquidity solution that can support competitive prices
- A Coordinator is a service that enforces rules over trade execution for a specific pool of 0x liquidity. They may be operated as independent services or bundled together with a relayer.
- Coordinators combine the best characteristics of Order Matching and Open Orderbook relayer models: market makers can perform free, instant order cancellations and users/devs can leverage contract-fillable liquidity (CFL) to power independent Ethereum applications.
- The first Coordinator demo implementation is live on Bamboo Relay, where you can find the best prices for DAI and WBTC across all DEXs. Try it out now!
0x relayers have typically chosen between the Order Matching or Open Orderbook relayer models, weighing tradeoffs around trade execution and openness. While order matching relayers provide a more familiar experience for market makers via off-chain order cancellations (soft cancels), and strong guarantees around trade execution (no front-running), the Matching model results in a closed liquidity pool. This precludes Order Matching relayers’ liquidity pools from being accessed by third-party frontends and systems of smart contracts. The Open Orderbook relayer model allows for contract-fillable liquidity (CFL), where 0x can serve as a composable building block for other DeFi contracts, at the expense of an optimal market making experience.
In this post, we explore a solution that combines desirable characteristics of these two relayer models: the Coordinator (short for Trade Execution Coordinator or TEC). The main goal of this model is to allow market makers to provide aggressive bid-ask spreads and deep liquidity while still allowing third-party smart contracts to consume this liquidity in flexible ways. Coordinators are the first DeFi liquidity solution that provides third-party contracts and their end-users with access to competitive prices.
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0x Blog - Medium