Orderbook DEXs Comeback

Orderbook DEXs are having a renaissance. L2 costs dropped enough that maintaining on-chain orderbooks makes sense. The AMM dominance is ending.

The user experience for limit orders is just better. Set your price, wait for it to fill, no slippage. Professional traders never liked AMM execution. Now they have alternatives.

Market makers returned to on-chain trading. Tight spreads, deep books, professional liquidity provision. The dynamics mirror CEXs but with self-custody.

Perps especially favor orderbooks. Funding rates, liquidation mechanics, sophisticated order types. The AMM model for perpetuals always felt like a hack. Orderbooks are natural.

Hybrid models combining orderbooks with AMM liquidity emerged. Route orders to whichever offers better execution. Best of both worlds.

The competition benefits users. AMMs forced to innovate. Concentrated liquidity, dynamic fees, MEV protection. The pressure from orderbooks drives improvement.

I think the optimal approach is splitting between AMMs and orderbooks depending on the pair and size. More options means better outcomes.