Vortex: An Orderbook Spot and Futures DEX Based on the ZK-SNARK Protocol
I. About Vortex
Vortex is a multi-chain spot and futures exchange based on the ZK-SNARK protocol, allowing peer-to-peer (orderbook) and pool (LP liquidity pool) trading for spot and perpetual contracts in a fully decentralized environment. Inheriting Ethereum’s security, Vortex offers lightning-fast speed, low cost, multi-chain support, unlimited scalability, and deep sharing. It also inherits Ethereum’s security and introduces features like launchpad, lending, insurance, SaaS trading sharing sites, and flash swap payment interfaces to better stimulate market liquidity.
Vortex’s order book trading mechanism brings many unique advantages to decentralized exchanges, making trading more transparent, flexible, and efficient. By using the order book model, users can clearly see the market depth and liquidity. This transparency helps enhance market trust and fairness, while the second-layer scalability engine enables 10ms trade execution speed. Vortex also encourages users to become order book liquidity providers, allowing them to earn token rewards through trading and additional incentives through liquidity provision.
Vortex has already opened BSC chain order book spot trading and will incentivize trading, liquidity provision, and burn incentives through its core governance token VTX, sharing transaction fee revenue with node users. This article will discuss Vortex’s zk-snark technology and order book mechanism in depth.
II. Introduction to Orderbook Trading Mechanism
On the Vortex platform, users can engage in order book spot trading and perpetual contract trading. The order book, or order book, is a collection of market participants’ orders. Here, buy and sell orders are arranged according to price and time priority, forming a dynamic market depth chart.
Because it uses L2 trading principles, users need to deposit funds from their L1 wallet (such as MetaMask) into the corresponding L2 account before trading on Vortex (buying, selling, opening, closing positions). Users can also freely deposit, withdraw, and transfer assets between their L1 and L2 accounts.
Vortex’s account system is divided into spot accounts and perpetual contract accounts, each operating independently. For contract trading, for example:- Users can choose to open positions (long or short): market orders, limit orders, stop-loss orders.- Leverage selection: Vortex offers up to 20x leverage in perpetual contract trading.For detailed operation video, please visit:
Vortex’s professional mode and TradeingView drawing tools are implemented simultaneously in spot and contract trading, providing users with professional and precise market analysis tools in both trading modes. Users will find that Vortex’s trading methods are consistent with their habits on centralized exchanges (CEX), making the operation very simple and smooth. However, Vortex can indeed avoid the falsehood and fraud that occur in centralized trading.
In Vortex’s order book spot trading, the system can aggregate real-time prices from top CEXs and automatically hedge arbitrage. This means that users can trade at the best price regardless of market price fluctuations. Additionally, users can choose market or limit orders for trading. Vortex’s trade execution speed can reach 10ms, meaning that users’ trades can be executed almost instantly, greatly improving trading efficiency.
Also, in Vortex’s order book contract trading, Vortex uses a funding rate model to balance the contract price with the underlying asset market price, maintaining market stability and contract pricing accuracy.
The funding rate is a payment mechanism between traders used to balance the market’s long (bullish) and short (bearish) positions. When the contract price deviates from the underlying asset price, the funding rate is introduced to encourage traders to take counter positions, helping to push the contract price back to the underlying asset price.
The funding rate is calculated every 8 hours. If the contract price is higher than the spot price, the long positions (bullish) must pay the short positions (bearish) the funding rate; conversely, if the contract price is lower than the spot price, the short positions must pay the long positions the funding rate. Payments are usually made in the underlying asset, with the funding cost deducted from the long positions’ accounts and distributed to the shorts. This mechanism encourages traders to adjust their positions according to market conditions, reducing the gap between the contract price and the index price.
Vortex’s funding rate model provides traders with a more stable and predictable trading environment. However, traders need to be aware of the impact of the funding rate on long-term positions and the potential trading costs caused by deviations between the contract price and the index price.
III. Encouraging Users to Become Orderbook Liquidity Providers
In addition to utilizing market makers for liquidity provision, Vortex’s order book trading also encourages users to become liquidity providers and share liquidity incentives. 16% of VTX token rewards will be used to incentivize user liquidity provision, rewarding order volume, normal operating time, two-sided trading depth, etc. Users can provide liquidity for BTC/ETH/BNB/DOGE and other trading pairs by placing depth orders for order book liquidity provision. Rewards will be distributed 30 days after today’s trading mining output. It should be noted that these incentive rewards only apply to depth orders within the ± 0.2% price range of the corresponding token; orders outside the fluctuation range will not be rewarded. Users also need to ensure stable liquidity provision during this period. If users provide liquidity for order book contracts, rewards will be calculated at 50% liquidity provision (considering leverage factors).
Initially, the main incentives will be for mainstream trading pairs on the BSC chain, such as BTC/ETH/BSC, reducing the risk of users becoming liquidity providers at the beginning. As Vortex runs smoothly, more chains and trading pairs will be gradually opened to incentivize liquidity providers.
Through this incentive mechanism, we expect users to actively participate in Vortex’s trading platform’s liquidity provision, injecting more liquidity into the entire trading ecosystem, creating a more stable and efficient trading environment, and providing traders with more choices and a better trading experience.
IV. Application of zk-SNARK Technology
ZK-SNARK, short for “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge,” is a cryptographic principle that allows one party (the prover) to prove that they know some information without revealing that information to another party (the verifier). Through ZK-SNARK, Vortex can prove the correctness of a transaction without revealing any details about the transaction.
In Vortex, every transaction is completed on-chain, and the trading match results are sent to L1 through L2. This design not only ensures the transparency of transactions but also greatly improves the efficiency of trading. Vortex’s transaction proofs are small in size and short in confirmation time. Moreover, as one of the Layer 2 scaling solutions for Ethereum, the security of zk-Snark inherits the advantages of the Ethereum mainnet, further ensuring the safety of funds on the chain. Every transaction in Vortex generates a ZK-SNARK proof, which can be verified on-chain, but does not reveal any detailed information about the transaction. In this way, Vortex achieves efficient, secure, and private trading.
Overall, ZK-SNARK technology gives Vortex a competitive advantage, enabling it to provide an efficient, secure, and private trading environment, meeting users’ needs for privacy protection, trading efficiency, and security.
In addition to spot and perpetual contract trading, Vortex also offers a range of products, including liquidity staking pools, Launchpad launch platforms, lending, insurance, and SaaS sub-sites, etc. Vortex is committed to building a comprehensive decentralized financial ecosystem, providing diversified and comprehensive financial services to meet users’ needs in digital currency investment and trading.