Orderbook DEX vs AMM DEX — What’s the Difference? 🔄

Decentralized exchanges mainly follow two models: Orderbook DEXs and AMM (Automated Market Maker) DEXs. Here’s a simple breakdown 👇

🔹 Orderbook DEX

  • Works like traditional exchanges with buy and sell orders

  • Traders place limit or market orders at chosen prices

  • Better price discovery and tighter spreads in liquid markets

  • Requires active liquidity and is more complex to scale fully on-chain

Examples: dYdX (earlier versions), Loopring

🔹 AMM DEX

  • Uses liquidity pools instead of order books

  • Prices are set by algorithms based on pool ratios

  • Anyone can become a liquidity provider and earn fees

  • Simpler UX but prone to slippage and impermanent loss

Examples: Uniswap, PancakeSwap

🔹 Key Difference
Orderbook DEXs are trader-focused, offering precision and control, while AMMs are liquidity-focused, prioritizing accessibility and automation.

👉 In short, orderbook DEXs suit advanced traders, while AMMs power most DeFi activity today due to simplicity and permissionless liquidity.

Both models are evolving—and hybrids may define the future of DeFi 🚀

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