Real Dex: On-Chain Orderbook DEX

Abstract

Centralized exchanges (CEXs) currently dominate the cryptocurrency trading landscape due to their speed, liquidity, and ease of use. However, they also introduce several critical risks, including custodianship of user assets, vulnerability to censorship, and reliance on centralized infrastructure that represents a single point of failure. In contrast, the advent of Automated Market Makers (AMMs), such as Uniswap, brought a paradigm shift in decentralized finance (DeFi) by enabling peer-to-peer trading through liquidity pools without intermediaries. While revolutionary, AMMs face inherent limitations such as slippage, impermanent loss for liquidity providers, and suboptimal price discovery compared to traditional orderbook systems. This research proposes a decentralized on-chain orderbook model designed to bridge the gap between centralized exchanges and AMM-based decentralized exchanges. The system replicates the precision, transparency, and efficiency of traditional orderbookdriven markets while adhering to DeFi principles of trustlessness and non-custodial asset management. Developed using Solidity smart contracts and deployed on Ethereum-compatible test networks such as Monad the platform enables users to place, cancel, and execute both limit and market orders directly on-chain. To address blockchain performance bottlenecks, the architecture incorporates an off-chain order matcher that listens to smart contract events, identifies compatible buy and sell orders, and batches potential matches for improved gas efficiency. Importantly, final trade execution and settlement remain fully decentralized, being handled exclusively by smart contracts. This hybrid design achieves low-latency order matching without compromising decentralization or asset security