Laminar Markets

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An Introduction To Laminar

Electronic markets are chaotic. Buyers and sellers interact rapidly placing orders, canceling orders and replacing orders in a desperate bid to stay ahead of the market and get the best price possible for their trade. Market participants come in many forms. Retail traders may place trades with patience and a degree of nervousness which sometimes turns into indignation. Systematic strategies consume hoards of market data and attempt to determine price movements. On top of this market makers take both sides of the book and attempt to bring some semblance of liquidity and normalcy to the ensuing stampede.

Centralized electronic markets have now existed for decades. They’ve benefited from years of refinement and have become stalwart in their robustness. Though they trade some of the most liquid and sought after products in the world, we rarely think of major equities electronic markets like Nasdaq or the NYSE as inadequate and unable to keep up.

This is where we come to Decentralized Exchanges ‘DEXs’, specifically order-book DEXs. At a high level these are supposed to operate akin to traditional exchanges.

Unlike a centralized exchange, a DEX, by virtue of being on a blockchain, must adhere to the many constraints and limitations of the chosen protocol — for which there are many. The computational capacity of the protocol is shared with every on-chain program or smart contract you could possibly imagine. You might think the order you’re about to submit to the DEX is the most important thing since the discovery of the Higgs boson — but no one’s going to open up a fast lane for you anytime soon. That blockchain is being shared. Nodes on the network are dealing with everything from folks paying for things online, to little Larry whose high school project is to deploy his own NFT. To compound this issue, protocols typically deal with transactions sequentially. In essence, if the network is busy, transactions are going to take even longer. Sounds challenging? Sure, but here’s where Laminar comes into play…

What is Laminar Flow?

Let’s go on a slight tangent and explain why we call our DEX Laminar. In fluid dynamics, laminar flow occurs when the particles of a fluid travel in smooth paths together, without any disturbance or lateral mixing. Think of it this way — particles can travel together and past one another where they don’t affect other particles in other pathways. Hold this thought as it’ll all make sense shortly…

What is Laminar?

Back to blockchains. The order in which transactions are executed is key. Hence why so many blockchains operate by applying transactions in sequence. One at a time. Carrying out all transactions in sequence without any concurrency ensures the integrity of the blockchain. The drawback of this is that handling transactions in sequence is slow, and if your overall transaction throughput is low, then on-chain programs which require substantial transaction throughput, like an on-chain DEX, will suffer.

With laminar flow, if particles don’t interact with each other, then they can travel in tandem. Similarly, if transactions don’t interact with each other, they can be executed in tandem.

Enter Aptos. Aptos uses Block-STM, a parallel execution engine for smart contracts. At a high level, this technology allows transactions to be executed and validated on multiple threads at once via a mechanism which checks dependencies between them. In a simple sense, if 2 or more transactions don’t affect each other, they can be applied in parallel.

If we were to consider typical transactions that an exchange or DEX deals with, a significant portion of these will not overlap. For example, when canceling orders in the limit order book, or entering orders at different levels of the orderbook. As such, Block-STM is enormously promising for building a resilient DEX.

Let’s run through a couple of Laminar’s key features:

Key Features

1. Parallelised cancels

As mentioned Laminar will use a core, innovative feature of Aptos called Block-STM to allow order cancels to be parallelized where possible, increasing the overall throughput of the DEX and reducing the need for market makers to spam cancel requests. With any participant, there will always be some variability in the time it takes to submit requests. Given that cancellations and other non dependent requests can be executed in parallel in the same block, the potential drawbacks of latency variability are reduced. A plus for market makers and more importantly, for liquidity.

2. Delayed Orders

In order to attract retail, users will be able to benefit from reduced taker fees by allowing their orders to rest on-chain for a short period of time. These orders will sit in the event queue for N blocks prior to crossing the book. Market makers here will be able to specify that a passive order (non delayed) will trade more aggressively against delayed orders, knowing these orders aren’t an HFT bot sniping them.

This gives the users a choice to evaluate the trade off between speed and cost, which will aid Laminar in drawing in users willing to sacrifice speed for lower trading costs, incentivising market makers to quote tighter spreads.

So, keeping it simple, our users will get lower taker fees by allowing their orders to rest on-chain for a short period of time, and market makers can specify that a passive order will trade more aggressively against delayed orders, providing better prices to most users.

3. Interface through SDK, UI or API

Laminar is for everyone, and we mean everyone. The DEX is completely decentralized and will always remain that way but we recognise that different users prefer to interact with the DEX in various ways. For this reason, we’ll offer a number of interfaces

*  SDK

The lowest level method of interacting with the on-chain program, the SDK offers developers the ability to get up and running quickly to interact with nodes and call on-chain commands directly. The SDK will be available in both Rust and Python.

*  UI

The Laminar Team will deploy an intuitive web based UI for point and click traders who gravitate towards the user friendliness of point and click trading. The UI will come complete with charts and real-time order book graphics similar to centralized crypto exchanges.

*  API

We’ll offer developers a REST and Websocket interface to programmatically interact with the DEX. If you’re integrating Laminar with your trading platform or have a systematic strategy you’d like to deploy and get trading swiftly — our APIs are here for you.

We hope you enjoyed a gentle introduction to Laminar. We’re all hard at work, but will be diving deeper into some of the details in upcoming posts, so follow us



Site: https://laminar.markets/

Twitter: https://twitter.com/LaminarMarkets

Medium: https://medium.com/@Laminar

Discord : https://discord.gg/AjUjwSS5Ev