Picking Winners in the CLOB Wars

Key Insights

• Hyperliquid is rapidly growing the market for onchain CLOBs, but DeFi incumbents rarely hold 80-90% market share over time.
• To identify winners amongst alternative CLOBs, we opt to dive deeper into more opinionated and performant designs.
• Two dominant design paths have emerged: real-time L2s and colocated L1s. Amongst them, different CLOBs are finding their own categories.
• We believe that some decentralization tradeoffs are worth making for this use-case, as the level of technical specification required is too burdensome for fully decentralized blockchain designs.

Setting the Stage

In Part 1 of our deep dive into onchain Central Limit Order Books (CLOBs), we explored why these “endgame DEXs” outperform AMMs and other DEX designs in delivering protected liquidity, price discovery, and best-in-class execution for major cryptoassets.