The quiet but potentially successful new contender in the CLOB wars
AMMs have been ideal for providing fast liquidity for years. They are simple, accessible, and suitable for small transactions.
However, they have serious limitations for high-volume, more complex transactions:
• Liquidity is spread across all price ranges, with a large portion remaining idle.
• MEV bots target pools during price movements, causing LPs to regularly incur losses.
• It can take hours for the pool to recover after large transactions.
Fuel introduces the "CLOB" model here. CLOB (Central Limit Order Book) is an order book model where buy and sell orders are listed with price and quantity information, and transactions occur when they match.
Advantages:
👉🏼 Precision liquidity: Capital is only positioned at the price levels you specify.
👉🏼 Anti-MEV: To frontrun, one must exceed all existing offers in the order book; with Fuel's UTXO model, this cost often exceeds potential profits in most cases.
👉🏼 Instant recovery: After large transactions, market liquidity quickly returns to previous levels with new limit orders.
👉🏼 Pro strategies – Algorithmic orders like TWAP and POV can operate on-chain with tick-level data.
👉🏼 New products: Perpetuals, options, and strategies involving multiple positions can be designed without the need for off-chain oracles.
Technically, Fuel makes this structure possible thanks to register-based FuelVM, UTXO parallelism, and EigenDA's high data bandwidth. Hundreds of order placements/updates/executions can be done in a single block with lower gas fees than a single swap on Ethereum.
AMMs will continue to exist, but can we say that CLOB is poised to change the balance on the high-volume side? 👀⛽️
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