Here’s how to tackle DeFi fragmentation through unified liquidity

Orderly Network unifies liquidity across multiple blockchains, enhancing trading efficiency and reliability.

Liquidity fragmentation is a persistent issue in decentralized finance (DeFi) , where assets and trading volumes are spread thin across multiple layer-2 networks. DeFi’s fragmented liquidity often results in higher trading costs, slower transactions and reduced leverage opportunities, causing inefficiencies and limiting the potential for seamless trading experiences.

DeFi needs unified liquidity across chains. By integrating trading orders into a single, cohesive order book, such solutions promise to enhance trading efficiency, paving the way for a more integrated and effective DeFi ecosystem.

Orderly Network is a layer-2 platform that delivers a permissionless liquidity layer for Web3 trading. Powered by the Orderly Chain and LayerZero, it provides the necessary liquidity and infrastructure for efficient permissionless trading.

Orderly Chain delivers CEX-like execution speeds to onchain DeFi trading. Source: Orderly Network

By converging all orders into a single shared orderbook across multiple chains, Orderly Network offers a unified liquidity landscape that improves trading efficiency, delivers deeper liquidity and provides tighter spreads.

Saving investors from downtime

The Orderly Chain, built on the OP Stack, leverages Celestia’s data availability and LayerZero’s cross-chain messaging protocol to serve as the settlement and ledger for all transactions.

This method ensures seamless operations during downtime, enabling brokers to confidently manage trading positions and user balances. As a result, Orderly unlocks cross-netting capabilities previously unavailable in DeFi, similar to the role of the Chicago Mercantile Exchange in traditional finance.

Unified liquidity across chains

Orderly Network’s infrastructure allows various decentralized exchanges (DEXs) and brokers to access a unified liquidity pool. The platform currently supports sixseven chains: Near, Polygon, Arbitrum, Optimism, Base, Ethereum mainnet and Mantle. This chain-agnostic approach facilitates liquidity, aids in clearing and settlement, and upholds DeFi's transparency.

A notable feature of Orderly Network is its Omnichain SDK, which offers a platform tailored for Ethereum Virtual Machine (EVM) developers. The toolkit simplifies the creation of perpetual protocols and advanced trading tools, akin to a plug-and-play set, reducing development time and effort for Web3 teams.

Solution: Combining DeFi with CeFi

Orderly Network is co-founded by Ran Yi and Terence Ng, who bring over 25 years of combined experience in global asset management and technical expertise in traditional finance. Their skepticism of conventional banking systems, exacerbated by the 2008 financial crisis and later by the collapse of FTX , motivated them to create a solution that combines the transparency of DeFi with the user experience of CeFi.

Ran Yi commented on their work, stating:

“As omnichain pioneers, we empower diverse users with liquidity and settlement support for any asset, any chain or any interface. Bridging gaps, we connect and amplify liquidity across crypto, fostering accessibility and equity, serving as the primary venue for price discovery.” 

Orderly Network has achieved $650 billion in cumulative trading volume with over 215400,000 onchain users and $56 million in total value locked (TVL), doubling in one month. With over 14 DEXs built on its platform, Orderly makes up 28% of all LayerZero messaging and 4035% of Celestia’s volume.

Supporters of the Orderly Network ecosystem. Source: Orderly Network

Since its inception, Orderly Network has secured $20 million in investment from institutions, including Pantera, Sequoia China, Laser Digital, Dragonfly and Jump.

DeFi liquidity roadmap

In the second half of 2024, Orderly Network plans to enhance its platform by introducing isolated margin, multi-collateral and onchain oracles. Isolated margin will allow traders to allocate specific amounts of margin to individual positions, limiting potential losses and enabling strategic leverage use.

Complementing this, the multi-collateral feature will broaden trading flexibility by allowing various assets to be used as collateral, enhancing liquidity and enabling diversified strategies. To further bolster these enhancements, onchain oracles will be integrated, providing continuous, transparent pricing data from multiple sources, thereby improving platform reliability and security.

In the lead-up to its token generation event, Orderly Network introduced “The Road to the Order” campaign, a gamified initiative designed to engage and reward active traders with “ Merits .” The campaign has attracted over 57,000 weekly active traders, allowing them to earn Merits with every trade. The Merits contribute to traders’ portion of the upcoming airdrop.

As platforms like Orderly Network address liquidity fragmentation, they pave the way for a more seamless, efficient and integrated DeFi landscape, ultimately bridging the gap between decentralized and centralized finance.