#11 - BUIDL an Orderbook-based DEX on Solana in 2 hours

Author: @harry830622, @ironaddicteddog

[Updated at 2022.08.25]

See the example repo here


DEX is an essential infrastructure for any DeFi ecosystem. Currently almost all exchanges in TradFi and CEXs are orderbook-based while major DEXs on Ethereum are AMMs due to some of Ethereum’s undesirable nature such as low TPS and high transaction fee, etc.

However, on Solana, a blockchain fundamentally more advanced than Ethereum, orderbook-based DEXs become much more practical.

In this session, we are going to BUIDL an orderbook-based DEX on Solana.

What is Central Limit Order Book (CLOB)

From Wikipedia:

  • A central limit order book (or CLOB) is a trading method used by most exchanges globally.

  • It is a transparent system that matches customer orders (e.g. bids and offers) on a price time priority basis.

  • The highest (best) bid order and the lowest (cheapest) offer order constitutes the best market or the touch in a given security or swap contract.

  • Customers can routinely cross the bid/ask spread to effect immediate execution.



Depth Chart

Price Discovery Mechanism

Match Engine

Constant Product Formula

Capital Efficiency






Serum: The Most Crucial Financial Infrastructure of Solana

  • Serum DEX is the matching engine powering Solana-based financial projects

  • Serum can power:

    • Spot Market

    • Derivatives Market (Zeta Markets / PsyOptions / off-piste / HXRO)

    • Liquidations (Jet Protocol / Tulip / Parrot)

    • Asset Management (Solrise / Nova Finance)

    • AMMs (Raydium / Atrix / Cyclos)

    • In-game NFT markets (Star Atlas / DeFi Land / Aurory / OpenEra)

Dominance of Serum


Raydium: AMM Built on Top of CLOB


  • High gas fees

  • Speed

  • High slippage on large orders

  • Fragmented liquidity


From Raydium lightpaper:

Unlike other AMM platforms, Raydium provides on-chain liquidity to a central limit order book, meaning that Raydium’s users and liquidity pools have access to the order flow and liquidity of the entire Serum ecosystem, and vice versa.

  • Raydium is a pure market maker which takes the tokens locked in it to create a series of orders at different price points and sizes to provide liquidity.

  • It creates orders using the constant product invariant. This equation has the special property that it is stateless and given any two tokens, without any information about their relative prices or value, it can provide “infinite” liquidity to traders.

  • Raydium utilizes this equation and prices orders on the orderbook according to the Fibonacci sequence to provide up to 20 orders at a variety of prices.

Components of Serum



  • Market is like a trading pair in CEX

    • Coin: Base Asset

    • PC(Primary Currency): Quote Asset

  • Open Orders is like your account in CEX

  • Vaults are the token accounts for the matching engine

  • Bids/Asks compose an order book

  • Request Queue is like a job queue

  • Event Queue records the events such as orders filled, orders cancelled, etc.

Place Order

  • Side

    • Bid

    • Ask

  • Order Type

    • Limit

    • Post Only

    • IOC

  • Init an open orders if there is none

  • Transfer funds to the vaults if the current deposit is not enough

Match Order

  • Match the order with orders on the order book

Cancel Order

  • Cancel the order placed before

Settle Fund

  • Transfer funds out of the vaults to your own wallets

Consume Event

  • To know what happened in the DEX


  • https://uniswap.org/blog/uniswap-v3-dominance#comparison-of-uniswap-v3-versus-centralized-exchanges

  • https://docs.projectserum.com/

  • https://projectserum.medium.com/serum-srm-and-the-ecosystem-part-1-2742f6a24597

  • https://projectserum.medium.com/serum-srm-and-an-ecosystem-for-the-future-part-2-91398e75ce27 https://projectserum.medium.com/calling-all-devs-serum-srm-and-an-ecosystem-for-the-future-part-3-ae7adbf4466e

  • https://raydium.io/Raydium-Litepaper.pdf

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