Jan 24, 2024
Product
Redefining DeFi with the Orderly Chain — A Closer Look at the Orderly Settlement Layer
by Orderly Network
Orderly Network thrives as the go-to infrastructure for DeFi builders. This assertion is further consolidated with the recent launch of the Orderly vault on Optimism — a feat pertinent to our ongoing omnichain expansion which began on the Arbitrum chain. Now, dApps and traders on OP Mainnet can tap into our shared liquidity and trade across multiple blockchains.
At the heart of this intricate ecosystem is our pride — the Orderly Settlement Layer, a native chain powered by OP Stack meticulously engineered to settle all trades on Orderly with precision.
In our previous exploration, we scratched the surface of the Orderly Chain. Today, we delve deeper, revealing how it isn’t just a component in our omnichain infrastructure — it’s a catalyst for reshaping DeFi.
Think of the Orderly Chain as the central nervous system of our omnichain infrastructure. Nestled between the Asset and Engine Layers, it’s not just another layer; it’s a crucial element ensuring accurate operation of ledger balances, user data, and all relevant trade details.
Missed our introductory insights? We invite you to revisit our earlier post to get the juice on the Orderly Chain’s foundational features and capabilities.
The essence of the Orderly Chain lies in its role as the definitive settlement layer for all transactions within the Orderly Network. Orderly’s settlement layer serves as a ledger for all transaction data, user data balances, and trading data retrieved from the engine layer.
Its independence is its power, maintaining seamless operations even in the unlikely event of a downtime to the matching engine. This resilience means that brokers on Orderly Network can confidently manage trading positions and user balances, ensuring uninterrupted service.
In essence, all brokers built on Orderly Network will always be able to keep track of all trading positions and user balances without any worries.
Trading on an orderbook interface across multiple chains might make you easily forget you are trading on a DEX. That’s fine; it’s what we aim to achieve as well — abstracting away all complexities related to DeFi trading.
But that does not mean we compromise on transparency. With all trades settled on-chain, powered by the orderly settlement layer, all transactions can be assessed via the Orderly Explorer.
Since we launched the explorer in Dec. 2023, we have recorded over 4.7 million blocks, 5 million + transactions across 64k+ wallet addresses; mirroring our continued and impressive surge in trading volume as confirmed on Defillama.
In TradFi, clearing houses have long been the bastions of security and trust, offering critical risk management and global cross-netting capabilities. The key here is “global-cross netting” function.
The global financial system is a vast network of banks, investment firms, and other financial entities, all engaging in a multitude of transactions every day. These transactions can range from buying and selling stocks, to more complex derivative contracts.
In a simple transaction, if Bank A owes Bank B $100, and Bank B owes Bank A $50, without cross-netting, these two payments would occur separately. This is not only inefficient but also increases the risk and the amount of capital that each party needs to hold to ensure they can make their payments.
Enter cross-netting: Instead of treating each transaction separately, the clearing house calculates the net obligations. In the example above, instead of two transactions, Bank A simply pays $50 to Bank B. This is more efficient and reduces the amount of money that needs to change hands.
CME Clearing plays this role in TradFi, sitting as the world’s leading and most diverse derivatives marketplace by daily volume, handling 3 billion contracts annually on average, worth approximately $1 quadrillion.
The Orderly Settlement Layer aims to embody this ethos in DeFi, acting as the decentralized clearing house for DeFi. With all Orderly vaults deployed across chains facilitating cross-chain trading, the Orderly settlement layer can serve as a highly efficient, global-scale infrastructure ensuring transactions are settled efficiently and securely.
Essentially, it will form an immutable, decentralized global netting system for trades, margin, and balance info, serving every user across all brokers on Orderly.
Also, given our permissionless nature, Orderly’s infrastructure democratizes market-making, spurring competition for the best liquidity and ensuring tighter spreads. This is not just about maintaining market efficiency; it’s about fostering a vibrant, liquid market ecosystem.
The Orderly Chain is redefining DeFi as a decentralized clearing house, settling trades on-chain with efficiency. Our omnichain infrastructure enhances DeFi builders’ and traders’ experience by enabling cross-functional trading and modular product launches, and central to this is the Orderly Settlement Layer — ensuring uninterrupted trade settlement, even if other systems go offline.
With more Orderly vault deployments in the works, we are certainly edging closer to a more efficient DeFi trading landscape– facilitating a permissionless liquidity layer for Web3.
