Introducing iZiSwap Pro: An AMM-driven Order Book DEX

iZUMi Finance
6 min readDec 15, 2022

What is missing in Decentralized Exchanges?

The cryptocurrency market has gained more public exposure than ever before in the year of 2022. “CeFi crises” have become the key controversy in this market cycle. Following BlockFi, Genesis, FTX, the “too big to fail” philosophy that people once believed do not seem to work in the crypto world, mainly because the early stage of the industry lacks supervision. As long as there is profit, centralized institutions will misconduct users’ funds under the cover of the centralized “black box”. Misappropriation of users’ funds, data falsification, and price manipulation have laid mines that will eventually blow up for the entire cryptocurrency industry, which also runs counter to the concept of blockchain and decentralization.

The essence of the blockchain is a decentralized ledger, which also serves as the foundation of building trust for a financial system. Utilizing its characteristics of transparency and safety, it promotes the establishment of a safe, transparent and open financial system. At the same time when the renowned CeFi giants collapsed, DeFi also ushered in its own coming-of-age ceremony after the liquidity mining carnival back in DeFi summer 2020. Whether it is a decentralized exchange or a decentralized lending platform, they all proved themselves to be trustworthy. The security and reliability of the platform assume people’s expectations for the next generation of decentralized finance.

However, DeFi is still far from perfect. Taking DEX as an example, due to the limitations of public chain performance and high gas fee for transactions, the order book model that users are used to in centralized exchanges has not been applicable on-chain before. Although users can use Uniswap or other AMM DEX platforms to meet their basic needs of “swapping” tokens, it is very hard for them to actually develop the “trade” behavior there that aims at profit, which is similar to what they’re used to while using centralized exchanges. The current AMM architecture is far from being realized, with drawbacks such as,

1. Slippage and MEV attacks. Users constantly suffer from high trading costs, which reduces their willingness to trade.

Major AMMs such as Uniswap are designed with continuous liquidity AMMs, which cannot avoid slippage and are vulnerable to MEV attacks. According to the statistics of EigenPhi, an MEV research organization, the on-chain transaction volume affected by MEV attacks exceeds 3 billion US dollars every week. The negative impact can never be ignored.

2. Poor flexibility in placing orders. Orders are completed at market price only, which has set limits on various trading strategies.

The current DEX solutions do not directly provide the technical support for the Limit Order function. Users can only perform “swap” transactions at the current market price, and can not capture trading opportunities through limit orders and other more complicated trading strategies. Projects such as EtherDelta have attempted to build an order book-based decentralized exchange in 2017, but they eventually failed due to the high on-chain transaction fees required for order matching and market-making. Some DEX aggregators provide limit order functions, but generally adopt relatively centralized solutions, which have the problems of capital security and transaction efficiency.

3. Rough user interface and poor user experience. Current DEX products lack tools such as visualized price tools and order management.

Almost all CEXes provide users with user-friendly tools such as customized trading pair collections, professional K-line charts and customizable indicators. Users can also view their transaction history. At present, DEX products are still rarely seen in providing such tools. Users have to rely on third-party tools in order to view historical price trends. And they have to use blockchain explorer, to view their own transaction records, in which the data structure is complicated for newbie users to read.

When the market focused on decentralized solutions, DEX itself was not ready for the influx of large-scale users. In the early days of the industry, developers were obsessed with technological innovation. New products were often just toys for geeks in the early days. User experience was not in the developers’ first priority unless they wanted to build their products to serve a larger scale. DEX has already reached the level of millions of users. To better enter the next era of billion users, technological innovation and user experience are both required from the protocol level, the infrastructure level, and the application level.

How to make trade-offs for various restrictions in on-chain scenarios? It’s time for a new generation of Decentralized Exchanges.

iZiSwap Pro: An AMM-driven Order Book DEX

We are strong believers who believe that on-chain solutions and decentralized exchanges will eventually cater all user experiences while achieving features including noncustodial, safe, and transparency.

iZUMi Finance proposed the Discretized Liquidity AMM (DL-AMM) mechanism in November 2021, initially realizing the coupling of a high capital efficiency AMM and decentralized limit orders.

In May 2022, the first version of iZiSwap was launched. After more than half a year of stable operation, iZiSwap has achieved a liquidity size of tens of millions USD. The daily transaction volume is millions of dollars, which reflects the high capital efficiency brought by the innovative design of DL-AMM.

Today, we are excited to present iZiSwap Pro — an AMM-driven order book DEX.

iZiSwap Pro is a groundbreaking next-generation Decentralized Exchange that integrates the friendly user experience of CEX and the security of DEX. Its advantages are:

1. Peer-to-pool and AMM designs, greatly reduce the transaction cost for on-chain order book

iZiSwap Pro designs a peer-to-pool model through which users will directly trade with the liquidity pool instead of trading with individual orders. It avoids the problem of order sorting and matching, and greatly reduces the computational cost on the blockchain, making on-chain order book transactions gas-efficient.

iZiSwap Pro also provides an AMM tool for market makers, who can provide liquidity in any price range and place a bundle of orders in one transaction. iZiSwap Pro helps market makers.reduce the gas cost caused by frequent placing and canceling of orders.

2. Zero-slippage, and no more MEV attack with decentralized limit orders

Unlike swap orders in traditional AMM, trading with limit orders has the advantages of no slippage and no risk of MEV attacks. Transactions are 100% transparent on-chain, and there are no trust issues of “black boxes” compared with other off-chain limit orders.

3. 100% on-chain safety and composability. Users’ funds have no custody risk

Like other AMM DEXs, iZiSwap Pro is non-custodial and fully on-chain. There is no risk of losing your fund to the bridge or platform. And liquidity could be easily integrated into aggregators and traded within one transaction without deposit-withdraw.

Using the NFT as a proof-of-liquidity, the liquidity providers can participate in staking, lending, and other scenarios, to further improve the efficiency of users’ funds on-chain.

4. User-friendly interface for on-chain traders

The front-end UI design of iZiSwap Pro tries to replicate the experience of CEX trading, including watch list, price charts, order management, etc. We eliminate the troubles for users to trade that as before, users will have to switch between various DEX websites and tools to find their desirable prices to trade with. It is also more convenient for personal asset management, while greatly improving the trading user experience, maintaining the key characteristics of DEXes such as noncustodial and censorship resistance.

The combination of advanced techniques and the new product is a vital leap in user experience.

iZiSwap Pro is currently in its alpha stage and will be launched soon. As a combination of innovative gas-efficient models and user-friendly interface, iZiSwap Pro is destined to bring users a next-generation on-chain order book trading experience.



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