Definition ∞ On-chain order books are decentralized exchange mechanisms where all buy and sell orders for digital assets are recorded directly on a blockchain. Every order submission, modification, and cancellation constitutes a transaction that is publicly verifiable and immutable. This design ensures transparency and reduces reliance on centralized intermediaries.
Context ∞ News often discusses on-chain order books in the context of decentralized exchanges (DEXs) and their advantages in terms of user control over funds and censorship resistance. However, debates frequently address the limitations, such as higher transaction fees and slower execution speeds compared to off-chain solutions. Innovations in layer-2 scaling and zero-knowledge proofs aim to mitigate these performance challenges, making on-chain order books more viable for active trading.
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