Intents vs Orderbooks
It's all about ordering
Last updated
It's all about ordering
Last updated
Within this wider landscape, Symmio is introduced as a clearing layer, operating under similar principles as a Blockchain, but commited on Future Settlement instead of Instant Settlement. Symmio focuses on enabling distributed derivatives and related financial instruments by creating a protocol how future settled contracts should be created.
The guiding intuition is that blockchains are inherently about ordering transactions and storing data in an immutable ledger, while Order-Books or RFQs are about ordering trade requests. Both are systems responsible for ordering messages. By examining traditional financial markets, two principal methods of price discovery emerge: order books and request-for-quote (RFQ) systems. In the cryptocurrency domain, RFQs have evolved further into what are known as “intents,” which can be considered pre-resolved RFQs.
The existence of order books and intents so far has been viewed as two contrasting paradigms. Traditional order books rely on a central monolithic order-matching engine that receives and matches bids and asks. In contrast, intents and RFQs often employ a more modular structure, where price discovery and transaction matching occurs peer2peer & through more modular processes without a single leader.
The complexity of global-scale markets suggests that relying on a single monolithic approach (where every participant competes on a shared global order book at the base layer) is likely to encounter scalability and fairness issues.
From a physical standpoint, the fundamental speed-of-light limit imposes a critical constraint on decentralized systems. Information cannot travel instantaneously across the globe, and no known technology or physical principle allows surpassing the speed of light. This limit affects how quickly nodes, validators, or market participants can learn about events and react to them. Information asymmetry in its core underpins many of the fairness and maximal extractable value (MEV) challenges observed in blockchain-based trading.
Location-based information asymmetry arises because participants with closer access to the information outbreak are faster to propagate a response, this becomes especially problematic when "decentralized" systems are starting to use co-location to increase their throughput.
With many projects in the space trying to explore co-located networks, we have to realize that co-location is just TradFi 2.0, in a distributed system with co-location the MarketMaker co-locating his systems to the node or mechanism responsible for ordering transactions can leverage private or early information to their advantage. This problem has historical precedence in traditional finance, where certain HFT market participants co-locate their servers near exchange data centers to gain a time advantage over competitors. In Co-Located systems that attempt to handle all ordering globally at the base layer, far greater issues will arise: participants with the lowest latency connections can exploit profitable opportunities before others. The phenomenon is not new and has been studied extensively in modern markets, yet co-location in cryptocurrency networks reintroduce it in new forms due to transparency and the pseudo-global accessibility of their ledgers. Therefore monolithic transaction ordering, where a single global order-book finalizes transaction order in one place and time, encounters inherent limits.
On the contrary, if a decentralized system aims to remain geographically distributed, the fair distribution of nodes ensures that no single observer can act upon all events simultaneously, but reduces throughput and latency drastically, as information cannot be agreed on faster than it takes the information to travel across the globe. As a result, attempts to achieve fully global and low-latency ordering often result in unfairness or the necessity to centralize infrastructure to a significant degree. Such centralization would undercut the fundamental ethos and resilience that decentralized systems are intended to provide.
Symmio proposes a modular approach to transaction ordering, which in contrast, depends not on overcoming the speed-of-light limit globally, but on improving computational and cryptographic efficiencies locally, to prove the transaction has been done based on locally available datasets. Verification of cryptographic proofs and signatures can be optimized with better hardware, parallelization, and algorithmic improvements. Over the past decade, verification speeds have improved dramatically, and they continue to do so.
In principle, computational verification can always be enhanced by employing larger datasets, more advanced mathematics, and more efficient computer architectures. By contrast, the speed of light and the basic laws of physics are immutable.
