Orderbook Matching

Definition ∞ Orderbook matching is the process by which buy and sell orders for a digital asset are paired and executed on an exchange. This system maintains a record of all open buy orders (bids) and sell orders (asks) at various price levels. When a new order enters the market, the matching engine attempts to find a corresponding order at an acceptable price, facilitating a trade. Efficient orderbook matching is crucial for market liquidity and fair price discovery.
Context ∞ The efficiency of orderbook matching is a key discussion point for both centralized and decentralized exchanges, directly impacting trading experience and market depth. A critical future development involves advancements in matching engine algorithms and distributed ledger technology to support higher transaction volumes and lower latency. News often reports on improvements in exchange infrastructure aimed at enhancing this core trading functionality.