CLOB (Central Limit Order Book)
A trading system that matches buy and sell orders based on price and time priority, aggregating all participants' orders into a single, transparent order book.
A Central Limit Order Book, or CLOB, is a trading system that aggregates all participants' buy and sell orders (see Kaavon's "Order Book" glossary definition) into a single, transparent book, matching them primarily by price priority (better prices match first) and then by time priority among orders at the same price (earlier orders match first). This is the dominant matching model used by most traditional stock exchanges and by many centralized crypto exchanges.
A CLOB is distinguished from an automated market maker (see Kaavon's "Automated Market Maker" glossary definition), which prices trades algorithmically against a liquidity pool rather than matching individual counterparties directly — on-chain CLOB implementations exist in crypto as an alternative to AMM-based DEXs, aiming to offer more familiar price-time-priority execution and tighter spreads for active traders, generally at the cost of needing enough active market makers and traders placing resting orders to keep the book sufficiently liquid.
Examples
- A CLOB-based exchange matches a new buy order against the best available resting sell order in the book, prioritizing the best price and, among equal prices, whichever order arrived first.
- An on-chain CLOB aims to offer the familiar price-time-priority execution of a traditional order book, as an alternative to the pooled-liquidity pricing model an AMM uses.