Features
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Demex has an order matching engine that is natively built into its L1 chain so that it can support complex markets or financial instruments such as perpetuals and options at scale.
Each validator node hosts a copy of the order matching engine, acting as witnesses to ensure all other nodes also process trade transactions correctly, thereby securing the network.
Using a batch-based matching system across all markets, Demex is able to perform low latency on-chain order matching that fully eliminates front-running.
A key feature of Demex is that its fully decentralized central limit orderbooks is also backed by liquidity pools and AMMs for both spot and perpetual markets.
For perpetual pools, the AMM uses uses real-time price feeds to provide bids and asks concentrated at the latest index price. This allows traders to enter / exit large trades with zero slippage or losses from spreads.
The liquidity provided by the AMM also co-exists with traditional market makers, allowing traders to enjoy even deeper liquidity on the orderbook. Users can visualize liquidity from AMMs on the order book and use advanced charting and trading tools like stop losses, to have a CEX-like experience.
Trades on Demex are executed every ~1.6s and are MEV-resistant, creating a fast and fair trading environment.
In Demex, orders in each block are treated as a single batch and are cleared in a mini-auction at the end of each block.
This means that all orders within a block are treated as having equal priority until they enter the orderbook.
For example, given an orderbook with a single ask at 3k, and a incoming bid for 4k and another at 3.5k, both bids will clear at the unit order price at 3k but the amounts will be prorated and divided up equally between the parties bidding for that quantity.
Demex minimizes value extraction by adopting batch execution for its orderbook order matching mechanism.
What is Value Extraction? Transparency on the blockchain means that users are often moving and transferring their funds into what can be best explained as an exposed glass box, where transactions are visible for a time before they are executed on the blockchain. Malicious actors can take advantage of this by observing, tracking and manipulating the order of transactions within a block for their own benefit, and at the expense of the user. This is known as front-running in the traditional financial sector, but has been referred to as Maximal Extractable Value in the blockchain space.
In batch execution, orders within a batch are treated equally without prioritization (such as order received time or transaction processing priority).
This way the price at the time of execution is the same for everyone and any front-runner would only be able to profit by a very small amount as they would not be able to take advantage of the price difference between different trades.
Demex offers traders up to 50x leverage for better capital efficiency, but that's not all.
Demex will also support cross-margin and multi-asset collateral in Q1 2025.
Cross-margin allows traders to use a single margin account to trade multiple contracts or markets simultaneously. This means that the margin balance in one position can offset the margin requirement for another position, effectively reducing the overall margin requirement.
For example, if a trader has a profitable position in one market, the unrealized profits can be used to cover the margin requirement for a position in another market. This allows traders to efficiently utilize their capital across multiple positions.
Multi-asset collateral support enables traders to use various tokens to open positions, rather than being limited to USD. This flexibility allows traders to make use of their diverse portfolio, which may even consist of yield-bearing assets to meet margin requirements.
For instance, a trader holding Bitcoin, Ethereum, and stablecoins can use any combination of these assets as collateral, depending on their trading strategy and market conditions.
The combination of cross-margin and multi-asset collateral support enhances capital efficiency by:
Reducing the total margin required to maintain multiple positions across different markets.
Allowing traders to utilize their entire portfolio to cover margin requirements, rather than being restricted to a single asset.
Enabling traders to take advantage of market opportunities more effectively by using unrealized profits from one position to open new positions or maintain existing ones.
By offering deep liquidity, zero spreads, and capital efficiency, perp traders on Demex can enjoy a trading experience even better than CEXs, while still maintaining full custody of their assets.
