Most decentralized exchanges today are built on AMM models.
While AMMs solve liquidity bootstrapping, they are not ideal for high-performance trading.
In this article, we explore a different approach: designing a fully on-chain trading system.
Key Design Problem
The core challenge is:
How do you achieve CEX-level UX while remaining fully on-chain?
This requires solving three constraints:
- Latency
- Execution precision
- State consistency
ACK vs Finalized
One key innovation is separating:
- ACK (fast response ~0.15s)
- Finalized (on-chain settlement ~2–3s)
This creates a hybrid UX:
- Users get instant feedback
- State remains fully verifiable
Trust Boundary
Unlike CEXs:
- No custody of user funds
- All logic is on-chain
Unlike AMMs:
- Execution is deterministic
- Not dependent on liquidity curves
This creates a new trust model.
Conclusion
Fully on-chain trading systems are not just an optimization.
They represent a new architecture for crypto trading.
As infrastructure improves, this model may replace both AMMs and traditional DEX designs.
References
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