Immutable X Protocol Orderbook — Solving Order Fragmentation

The orderbook, sometimes referred to as the book or list of orders, is where a trader’s buy and sell orders are displayed. The need for an immutable orderbook has led to projects like EtherDelta that rely on their own decentralized exchange but with some drawbacks. This project introduces a new protocol that will allow market makers (the people who make markets) and takers (people who take them out) to interact in real time without relying on centralized exchanges.

The “immutable x transfer nft” is an ERC-20 token that has been designed to solve order fragmentation. The immutable x protocol allows for a single transaction to be submitted and executed by the network, which then distributes the order across all available nodes in the network.

So, what happens to “maker” orders before they are filled by “taker” orders? Maker orders are kept in an order book at the backend. Traditionally, each marketplace or exchange would create and maintain its own orderbook, which will be used to show live orders.

Currently, the most successful NFT markets are large, wide aggregators – sites like OpenSea, LooksRare, and the impending Coinbase — where you may trade any sort of NFT. Many next-generation NFT markets, such as Fractal or Gamestop, aim to deliver an amazing experience for a specific group of NFT traders (e.g. gamers), and new NFT marketplaces appear on a weekly basis. As illustrated in the picture above, each of these new markets has generated its own orderbook.

Because postings only appear on their originating marketplace, order dispersion occurs as a result of all these various orderbooks. Each marketplace’s orders can only be completed by users of that marketplace. There might be hundreds of individuals willing to pay your asking price throughout the NFT ecosystem, but if none of them utilize your marketplace, your NFT will never sell. The overall liquidity of your NFTs suffers as a consequence of this fragmentation.

Listing tools such as genie.xyz, which allows you to sell assets on different markets, and gem.xyz, which allows you to acquire assets across marketplaces, have been established by some talented builders. However, this only helps NFT power users who are a) aware of the tools and b) prepared to give up their chosen marketplace interface. They certainly don’t address the issue for the millions of consumers who will purchase their first NFT in the next three years and need the simple rails that more user-friendly markets give.

Regrettably, this disintegration is set to become far worse. A new form of NFT marketplace is on the way: native markets, which are designed expressly for certain types of NFTs. This might be an in-game marketplace incorporated directly into the game client, or a separate online marketplace like NBA TopShot. Imagine purchasing Gods Unchained cards straight from the board, or Call of Duty skin from the deathcam.

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Turn “right click save” become “right click purchase” in-game.

In this scenario, order fragmentation is a major issue: how can you create a fantastic experience in a game if you don’t have access to the maker orders required for quick purchases or price discovery? Despite the fact that these experiences are obviously beneficial for consumers, it’s feasible that if orders stay isolated, users may be drawn away from these incredible experiences and into generic markets with a larger selection of orders.

Marketplaces that have their own orderbook aren’t the only ones that suffer from segregated liquidity. Maintaining your own orderbook may add a lot of operational complexity – although creating a modest orderbook is straightforward, scaling an orderbook becomes considerably more difficult when trading bots compete for order flow and hundreds of thousands of users engage with the same orders. Order cancellation is an excellent example of unanticipated complexity. Because on-chain cancellation is prohibitively costly, most NFT orders are “soft-cancelled,” which means you trust the marketplace to cancel the order you signed. Assuming that marketplace’s API exposed the signed order at any point in the future, the order might still be published and completed (if it was saved) at any time in the future, resulting in assets being sold for a fraction of their present market value.

Our answer is straightforward: given Immutable X, create a global protocol-level orderbook. Any orders generated anywhere on the Immutable X protocol are instantly viewable on any IMX-integrated marketplace in a protocol-level orderbook. Our vision is to create a marketplace environment in which hundreds of specialty and native markets may coexist alongside bigger, aggregate marketplaces. GUDecks, a Gods Unchained deck builder, is a wonderful example of this, since it enables you to quickly duplicate and purchase popular decks – an amazing contextual experience that is only feasible with external order flow.

We can avoid entire categories of synchronization and UX difficulties by providing both the orderbook and the exchange contract (with L2 scale) and establish the greatest platform in the world for high-quality NFT applications like games by providing both.

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The Order Book for the Immutable X Protocol

The Immutable X order book seems to be a straightforward offering. Currently, Immutable has designed and maintains four basic APIs that anybody in the world may use to:

All of Immutable’s APIs provide extensive metadata filtering, which is based on our protocol-wide NFT metadata indexer, which is critical for order retrieval. All orders placed in the previous 15 minutes that purchase Guild of Guardians heroes with (class = mage, element = dark, faction = glade) may be retrieved with a single API request. Without creating a single line of backend code, markets may create complicated frontends with filtering, searching, and sorting. Check out our API docs for a complete list of available filters (we’ll be publishing a tutorial on how to use metadata filters shortly).

Marketplaces may attach fees to each order they submit, defining specific costs to numerous receivers on a per-order basis, to incentivize them to contribute to this orderbook. Fees are same across markets, so the originating marketplace benefits from sharing its liquidity with the protocol regardless of where the final deal takes place. Marketplaces will establish rates based on what they believe they can justify; if you believe your users will continue to create assets on your platform, you should charge greater fees.

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The Immutable X orderbook was released in conjunction with the protocol in mid-2021, but this is the first time we’ve talked about it on the blog. The Immutable X orderbook has received over 20 million orders to far, and there are now over 5 million active NFT listings. We’re in the midst of adding some of the world’s major NFT marketplaces (launched and unlaunched) to this liquidity pool, and the orderbook already serves over 150,000 API requests per minute.

What am I supposed to do with it?

It’s simple to create a trading software or a market maker. Work your magic, then build and submit your taker order to establish a trade using the API to collect current orders and historical transactions.

If you’re creating a marketplace, you have two options:

Option 1: Directly use the Immutable X APIs from your frontend.

If you’re creating an Immutable X-only marketplace or integrating Immutable X asset trading into a native experience like a game, the easiest method to integrate is to use the Immutable X APIs directly. You can utilize a parametrized call to get the orders, then use the Immutable X Link’s buy(order id) method to have the user construct and sign the corresponding taker order automatically.

Option 2: Integrate your own backend with the Immutable X orderbook.

If you already have an orderbook or are displaying assets from many chains at the same time, the ideal integration approach is generally to synchronize. At the present, the only method to do so is to poll the key endpoints in our system for any changes in order status at regular intervals (e.g. new orders, cancelled orders, filled orders).

You’ll need to utilize a similar polling mechanism for asset transfers, trades, and mints if you wish to keep track of the assetbook (to display user inventories).

We’re striving to enhance the developer experience here, and will most likely migrate to an event-based approach in the future — do let us know if you have any suggestions for how you’d want to accomplish this synchronization.

Is using the Immutable X order book required?

The order book is now implemented at the protocol level, which means you can’t submit trades unless at least one of those orders is already in the orderbook. This may change in the future, but we’re wary about doing anything that may splinter the liquidity of our games and markets.

What’s in it for my business?

Though the protocol orderbook will vastly enhance trading experiences, our primary consumer for this product is marketplaces; if they don’t adopt it, liquidity will not increase. The protocol orderbook is obviously useful for nascent markets and native experiences – the most difficult challenge to address is bootstrapping liquidity, and being able to display your consumers orders that originated elsewhere is critical.

Some established marketplaces may be hesitant to share orders with other marketplaces at first. Allowing other marketplaces to complete your orders, on the other hand, gives you access to the aggregate user base of all of those markets. Having a large number of possible buyers will result in a large number of deals, with the additional volume likely outweighing the costs you’ll save by not needing orders to be completed on your marketplace. Furthermore, your marketplace will be able to fulfil orders received from other markets.

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As additional markets link with the orderbook, this tradeoff will become more tempting – users won’t want to submit orders that can only be completed on a single marketplace when they could be making listings that are viewable throughout the whole protocol. Finally, this will assist markets in scaling; in general, once marketplaces exhaust the demographic for whom their offering is most suited, their customer acquisition costs will rise. By integrating with the common orderbook, markets will be able to benefit from growth throughout the protocol, especially from marketplaces that cater to a different sort of NFT trader. This will drastically minimize the requirement for big customer acquisition expenditures, allowing resources to be reinvested in the core offering.

The IMX Orderbook in the Future

Right now, our primary emphasis is on integrating the Immutable X orderbook into as many markets as possible, as well as guaranteeing that we can meet the product’s quickly increasing demand. We’re also thinking about how we can provide marketplaces additional data about how their orders are consumed so they can better target their target consumers.

We’ll keep adding features to the orderbook as we offer new forms of trade on Immutable X. When we add “metadata orders” (trading assets based on metadata features), for example, they will be added to the common orderbook as well. We’ll have an update on our intentions for StarkNet shortly, and the order book will undoubtedly play a role.

Immutable’s objective is to tackle the issues that are preventing mass-scale, high-quality NFTs from taking over sectors such as gaming. The Immutable X orderbook was created to address the issue of order fragmentation and to enable game developers to create incredible in-game trading experiences. We’d love to hear from you if you’re working on a web3 marketplace or game. If it’s a purpose that appeals to you as a builder, we’re hiring in product, engineering, and design – there’s still a lot of work to be done to make high-quality NFTs available to everyone.

This is the first in a series of articles that will cover the full Immutable X package. You may receive them first by following both Immutable and myself (Alex Connolly, CTO) on Twitter.

The “immutable x token” is a protocol for trading tokens that solves the order fragmentation problem. This allows traders to trade without having to worry about their orders getting canceled or partially filled.

Related Tags

  • immutable x coin
  • immutable x investors
  • immutable x minting
  • immutable x nft
  • what is immutable x built for?

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