Consolidated Order Book for Multi-Exchange Liquidity
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Solution Overview
Problem
Existing asset exchange systems face challenges in matching orders across multiple exchanges, leading to liquidity issues and increased transaction costs due to the lack of coordination between different platforms.
Innovation Solution
A system that aggregates order books from multiple asset exchanges into a consolidated order book, allowing for inter-exchange matching and using custodial/escrow services to execute orders periodically, reducing transaction fees by consolidating orders before execution.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If orders are matched separately on each asset exchange, then each exchange maintains independent control and simplicity, but liquidity is reduced and transaction costs increase due to lack of coordination
Solution Approach 1:
The patent merges order books from multiple asset exchanges into a single consolidated order book, allowing orders to be matched across exchanges. This combines the liquidity of multiple exchanges while maintaining a unified matching system, resolving the contradiction between improved liquidity and system complexity.
Solution Approach 2:
The consolidated order book acts as an intermediary layer between multiple asset exchanges. It receives orders from various exchanges, performs centralized matching, and executes trades, thereby improving liquidity without requiring direct complex coordination between each exchange pair.
2Loss of energy
If multiple separate order books are maintained across exchanges, then each exchange operates independently, but transaction costs increase due to repeated executions
Solution Approach 1:
By consolidating multiple order books into one, the system reduces the number of separate trade executions needed. Orders can be matched in a single consolidated book rather than requiring multiple separate executions across different exchanges, thereby reducing transaction costs while improving matching efficiency.
3Productivity
If a consolidated order book is implemented across multiple exchanges, then liquidity increases and transaction costs decrease, but system complexity and coordination requirements increase
Solution Approach 1:
The system segments the consolidated order book functionality into distinct modules: order reception from multiple exchanges, order matching engine, and execution interface. This segmentation allows the complex consolidated system to operate efficiently by dividing tasks into manageable, independent components that can process orders rapidly.
Data Source
AI summary
A system includes processor(s), memory(s) and a network interface that receives information regarding a plurality of order books from a plurality of asset exchanges. The processor(s) is configured to update a consolidated order book based on information regarding the plurality of order books for local orders received from users of the system. When a received new order does not match any order in the consolidated order book, the processor(s) is configured to place the new order in at least one of the consolidated order book, a separate local order book, or at least one of the plurality of order books of the plurality of asset exchanges. When the new order matches an order in the consolidated order book, the processor(s) is configured to: communicate a custodial order to the particular asset exchange.