There exist two types of crypto exchanges in the industry: centralized and decentralized. They both come with their shortcomings: centralized exchanges are vulnerable to hacks, whilst decentralized exchanges are still a relatively new introduction to the industry. Liquidity has always been an issue for exchanges that results in traders having difficulty in performing profitable transactions from popular exchanges.
So, to solve this liquidity problem associated with exchanges, Alexey Koloskov, CEO and Co-Founder of the Orion Protocol, launched this project in 2020 to solve some of the largest issues in DeFi by aggregating the liquidity of the entire crypto market into one decentralized platform.
In the blow text, we will take a look at Orion Protocol that promises what the cryptocurrency industry needs today.
What is Orion Protocol?
Orion Protocol is the brainchild of Alexey Koloskov, CEO of the Protocol and the former chief architect and creator of the Waves decentralized exchange, who started the development in 2018. In Q2 of 2020, the team released the public testnet followed by the public mainnet in December of 2020.
Orion Protocol is a new kind of DeFi platform that combines the best features of exchanges, brokerages, and instant trading apps. The protocol aims to bridge the gap between the centralized and decentralized worlds of crypto.
The platform promises to does so by leveraging a liquidity aggregator connected to all of the major crypto exchanges, centralized and decentralized, and swap pools.
With these features, the platform wants to enable traders to gain the best price for their trades from a single portal. It offers powerful portfolio management tools, security, convenience, and flexibility to offer a place that is suitable for experienced traders, institutional traders, and newcomers alike.
The following words from Alexey Koloskov describe the ambitions of Orion Protocol:
“Although it’s clear the future should be decentralized (after all, it’s what crypto is fundamentally built on), it’s impossible to ignore the prominence of centralized entities. Orion was born out of the need for an intermediate solution that bridges the gap between the centralized and decentralized worlds of crypto. Our ambitions for Orion have always been to push beyond what was currently possible. In what we’ve built to date and in our roadmap we’ve done that, having built a protocol that will change the future of DeFi for the better.”
Orion Protocol Architecture
The core of the Orion Protocol consists of the modular architecture of distributed and decentralized services that fulfill all their settlement on the Ethereum platform. The majority of Orion’s core components are open-source to the Orion Foundation.
Firstly, the Orion Protocol standardize an API for the different elements of its liquidity aggregator, providing a common language for connecting to any exchange. Secondly, it creates a marketplace for DApps built on top of its protocol that may include arbitrage apps, algorithmic trading bots, investment funds, and payment integration systems. The network of components that comprise Orion’s marketplace for DApps can be developed and enhanced by third parties, ensuring greater quality and availability of functionality.
The core components of Orion Protocol
Order Matching Engine
The main purpose of the order matching engine is to ensure that trades are executed at the most advantageous price by accessing the lowest asks and highest bids across all available exchanges. When an order is received, the engine first tries to execute it on the internal order book. If the internal order book does not provide the best prices, then it does a smart search by using data provided by the Price Discovery Module to find the exchange or exchanges that offer the best price for the amount required.
When the order is placed, the Orion Protocol uses specific executors for CEX and DEX to execute orders. CEX executors work with API keys where DEX executors sign orders right from the multi-currency wallet using a private key.
The centralized exchange executor is simply an adapter for a particular exchange that can send Buy or Sell limit orders using the provided API key, and monitor them for fulfillment.
DEX module is used to connect to a DEX the same way that the order-matching engine connects to a centralized exchange. But instead of using an API key, DEX executor uses a private key provided by a multi-currency wallet
It is just a wallet that supports multiple cryptocurrencies along with Orion’s native token ORN. It is used to sign DEX orders for DEX executors and can be integrated into a portfolio management module to provide a history of operations and calculate the cost and profit of trades.
Price Discovery Module
It is like a plugin that offers a feed of live prices from exchanges in real-time. A new plugin can easily be written by creating a simple interface and presenting exchange information within it. Providing price data is charged in ORN tokens from the clients and the developers receive a fee for providing that data.
Portfolio Management Module
This module provides a range of functions for smart portfolio management including trading history, current balance, profit/loss, and comparing different trading strategies.
A wide range of apps like trading bots and payment gateway can be created on the protocol. The first DApp running on the Orion Protocol is Orion itself. ORN token is used extensively in DAppsas a utility token, being used to pay for all services, including for commission fees, and within its lending model.
The Crypto index funds module and Decentralized brokerage module are also core components of the network. Read Orion Whitepaper to learn about them.
Orion Flagship: Orion Terminal
The flagship product of Orion Protocol is Orion Terminal that aims to be the first gateway to the entire crypto market aggregating every CEX, DEX, and swap pool into one decentralized platform. It seamlessly aggregates bottomless liquidity from all major exchanges to provide rich trading tools in one easy to use platform.
As Crypto Economy reported, Phase 1 of Orion Terminal went live on mainnet on December 15, 2020. Phase 1 supports trade, deposit, and withdrawal services. More features including and trading pairs will be added continually over the following month, including ORN staking in early Q1. Lending, margin trading, leveraged ETFs, derivatives, contract trading, NFTs, and staking of any digital asset type will also be added in the future
The data aggregated by Orion Terminal is also being fed to Chainlink’s price oracle network.
This is the DApp marketplace mentioned in the architecture section. User can buy Orion based applications and trading signals from independent developers from this app store.
Enterprise Trade Widget: This allows partnering firms and non-blockchain-based companies to integrate crypto trades directly on their applications and websites.
Liquidity Boost Plugin: This plugin allows CEXs and DEXs to increase liquidity on their marketplace instantly through a custom-designed matching engine, which connects to dozens of different exchanges in real-time. Exchanges can place this plugin on their platforms to contribute to Orion’s aggregated liquidity.
Blockchain DEX Kit: This provides the easiest way for users to users can launch their own decentralized exchange with instant access to Orion’s liquidity.
$ORN is an ERC-20 token that is used to perform all major activities on the platform. While other currencies will be accepted, paying with ORN will secure a discount for fees and other functions.
Orion has sought to ensure the deep-utility of its native ORN token across the entire protocol, integrating it into all main transactions to take the form of an internal currency or utility token.
According to its website, the ORN token offers sixteen revenue streams and is the first was token sold through Dynamic Coin Offering (DYCO).
ORN is used for Orion Terminal, staking in the decentralized brokerage, non-broker staking, and for payment on App Store. ORN holder will have access to premium trading features like Limit orders, stop market, and stop-limit orders, as well as controlling stop loss and take profit parameters.