GlossaryAdvanced
Batch Auction
A trading mechanism that collects multiple orders over a short period and settles them all together at a single clearing price.
A batch auction collects multiple buy and sell orders over a short period, then settles all of them together at a single clearing price, rather than matching and executing each order immediately and individually as it arrives, the way a standard continuous order book does.
Batching orders together specifically mitigates certain MEV strategies (see Kaavon's "Maximal Extractable Value" glossary definition) — such as front-running a single visible pending transaction — since every order within the same batch receives the same clearing price, removing the advantage of being first in line within that batch.
Examples
- Every order within the same batch auction settles at the same clearing price, removing the advantage of being processed first within that batch.
- Batch auctions are specifically designed to mitigate certain MEV strategies that exploit the ordering of individually-executed trades.