Dexterity: The Global Orderbook
Last updated
Last updated
At the core of Spicenet's global market mechanism is Dexterity, the global orderbook for universal trade settlement across applications. One of the main painpoints of exchanges is liquidity fragmentation, i.e liquidity on one exchange can't be accessed from another venue. On Spicenet, we aim to completely break this status-quo, by allowing applications to source liquidity from a single, global pool of liquidity, liquidity can be shared between applications! But, how does this work?
Crypto exchanges today face a problem of liquidity fragmentation, where liquidity deployed on one exchange cannot be accessed by another. As more and more exchanges proliferate, it will become harder to execute complex portfolio strategies on on-chain DEXs due to massive fragmentation of liquidity. At Spicenet, we believe that the proliferation of trading applications is good, as they provide fun and speculative experiences for end-users. However, tackling liquidity fragmentation caused by the emergence of these trading applications is critical. So, how do we solve it?
Dexterity is the canonical trade execution and settlement mechanism on Spicenet. Dexterity has a few key properties,
Shared liquidity across applications
Increased capital efficiency
Turning liquidity into an easily accessible public good
Increased programmability
Let's see how Dexterity functions from the lens of it's underlying properties. Dexterity is a global pool of liquidity that is shared across applications. Meaning that applications on Spicenet can permissionlessly plug into the deep pools of liquidity that Dexterity has to offer, rather than building their own siloed liquidity pool. This builds organic network effects, as all applications plug into the same pool of liquidity, and liquidity bought by one application can be used by all other applications too.
Secondly, Dexterity is highly capital efficient. Rather than liquidity serving just one application, liquidity on Dexterity serves a host of applications on Spicenet. By putting capital to work at all times, Dexterity maximally enhances capital efficiency for liquidity deployed on its orderbooks. Third, Dexterity turns liquidity into an easily accessible public good. One of the most powerful things for an exchange is the ability to access deep pools of liquidity. Dexterity allows Spicenet applications to do so without spending millions of dollars every year on incentivizing market makers. In other words, Dexterity turns liquidity into a public good that applications can use and source at any time, permissionlessly. This is what we think will unlock the next frontier of trading applications on-chain, i.e the ability to access deep liquidity for 0 cost.
Fourth, Dexterity elevates programmability to a completely new level. Applications and users can permissionlessly list new markets on Dexterity, provided there is an oracle tracking prices for the same. By turning markets into a global property, applications on Spicenet can benefit from hundreds of markets listed permissionlessly. This massively reduces the hurdle of listing and bootstrapping new products for applications. To illustrate how easy this is for applications, an application A on Spicenet can list markets for interest-rate derivatives, and other applications on Spicenet can permissionlessly support these new markets without no additional hurdle.
In conclusion, Dexterity allows applications to plug into a global pool of liquidity, that is shared between all applications. Dexterity drives down the cost of accessing liquidity to near 0, making it incredibly easy for applications to source liquidity for their use-case. Dexterity enhances capital efficiency and programmability, by putting liquidity to work across a host of applications, rather than just one, and making market listing permissionless, and allowing applications to benefit from new listings with any additional overhead.
