The Application of Blockchain Technology in Quantitative Finance: Design of Decentralized Trading Systems

Abstract

With the rapid advancement of blockchain technology and the expanding influence of decentralized finance (DeFi), centralized trading systems (CEX) increasingly confront critical challenges including single points of failure, insufficient data transparency, and elevated transaction costs. Therefore, it is imperative to develop and explore decentralized trading systems that are compatible with and adaptive to quantitative trading strategies. This study focuses on constructing a framework for decentralized trading systems suitable for quantitative strategies, aiming to reduce transaction costs, enhance strategy transparency, and improve risk resistance capabilities. By analyzing the technical architecture (including public chain adaptations: Solana for high-frequency strategies and Ethereum Layer 2 for medium-frequency strategies), innovations in decentralized exchanges (DEX) (such as order-book based dYdX and AMM based Uniswap V3), and the application of on-chain quantitative tools (like Nansen for whale behavior tracking and automated execution tools based on Aave smart contracts), the study confirms the feasibility and advantages of decentralized design in quantitative scenarios.