Explain to you the economic principles of DeepBook

DeepBook is the first native liquidity layer on Sui, through Sui's predictable and low gas fees , it will facilitate large-scale transaction activities on DeepBook . Given DeepBook's Central Limit Order Book (CLOB) architecture, the greater the transaction volume, the more standardized the asset price becomes, thus meeting the dual needs of buyers and sellers.

The first 90 days of Sui mainnet data demonstrates how its gas fee model and network scalability can avoid gas fee spikes. During that period, network traffic peaked at 5,414 transactions per second, yet there was no increase in gas fees or additional cost to users.

As traders see their funds spend less on gas, there is a corresponding increase in activity in the DeepBook. The CLOB architecture supports large, powerful market participants from individuals to institutions. More activity promotes the balance between supply and demand, thereby maintaining the stability of the market.

economies of scale

As a central limit order book (CLOB), DeepBook resolves sell requests for digital assets through “asks,” which require the sale of digital assets at a certain price, and resolves buy requests for digital assets through “bids.” Sellers can ask for a specific price or trade at the market price, the average price people are willing to pay for the asset. Likewise, buyers can set the price they are willing to pay, or buy the asset at the current market price.

Someone who buys or sells at the market price (i.e., a market order) expects the transaction to be completed almost immediately, whereas a person who sets a price (i.e., a limit order) requires waiting until someone is willing to hit that price.

However, DeepBook will combine asks (sell) and bids (buy) to meet market demand. For example, if a user makes a sell request for 50 tokens, and someone puts out a buy request for 1,000 tokens, DeepBook will automatically merge the 50 tokens into a pool with enough other sell requests, To satisfy the overall buy request of 1,000 tokens.

As users place limit orders, the lowest buy request and the highest sell request are often not fulfilled, and instead buy and sell requests close to the market average are prioritized. This mechanism helps to regulate prices at levels desired by most participants.

Generally speaking, the more traders pay in terms of market rates, the less money they have available to buy assets. While most blockchains charge a gradual increase in gas fees as transactions increase, the gas fees on Sui will not increase significantly. This very important distinction means that on other blockchains, more and more funds in user accounts are used to pay gas fees simply because more people are transacting at the moment. On Sui, the transaction volume will increase substantially, but the gas fee (the cost of each transaction) will not increase, and users will have more funds to use in the market.

discuss in depth

Established as a public product, DeepBook aims to act as a neutral arbiter on Sui to promote the development of DeFi. Any DeFi builder can connect their platform or apps to it and take advantage of not only its CLOB functionality but also its liquidity pools. In this way, users of one DeFi app on Sui can transact with users of other DeFi apps.

The more people transact on the apps and platforms connected through DeepBook, the more the prices will normalize. At the same time, with the increase of transactions, the gas fee will not increase.

Builders can use the DeepBook documentation to start building their own DeFi apps and platforms.

About Sui Network

Sui is an L1 public chain redesigned and built based on first principles, aiming to provide creators and developers with a development platform capable of hosting the next billion users in Web3. Applications on Sui are based on the Move smart contract language and are horizontally scalable, allowing developers to support a wide range of application development quickly and at low cost. Get more information: https://linktr.ee/sui_apac