What is Vertex Protocol?
Vertex is a cross-margined decentralized exchange (DEX) protocol offering spot, perpetuals, and an integrated money market bundled into one vertically integrated application on Arbitrum.
Vertex is powered by a hybrid unified central limit order book (CLOB) and integrated automated market maker (AMM), whose liquidity is augmented as positions from pairwise LP markets populate the orderbook. Gas fees and MEV are minimized on Vertex due to the batched transaction and optimistic rollup model of the underlying Arbitrum layer two (L2), where Vertex’s smart contracts control the risk engine and core products.
Vertex boasts extremely low-latency trading and effective liquidity utilization across a broader range of DeFi assets as a byproduct of its hybrid orderbook-AMM design. The off-chain sequencer architecture also helps to minimize the Miner Extractable Value (MEV) characteristic of Ethereum L1 while enabling lightning-fast trading.
The integrated AMM is located on-chain – housed within the protocol layer. The on-chain AMM functions as the default state of the protocol controlled at the smart contract level, known as “Slo-Mo Mode.”
Vertex’s orderbook (the “sequencer”) operates as an off-chain node layered on top of the smart contracts and contained within the Arbitrum protocol layer. The orderbook matches inbound orders with execution speeds between 10 – 30 milliseconds, competitive with most centralized exchanges (CEXs).
The pooled liquidity of the AMM sits alongside the bids and asks on the Vertex orderbook, effectively another market maker contributing to liquidity via smart contracts rather than API.
The AMM liquidity is combined with liquidity from automated traders via the sequencer, and users trade against this unified source of liquidity.
Vertex provides robust, scalable infrastructure for HFTs and automated traders via the Vertex API and SDK. Low-value, extraneous transactions are excluded, enabling Vertex to optimize gas efficiency and translate across EVM-compatible chains.