Introducing Vertex Edge — The Future of Liquidity is Synchronous

Introducing Vertex Edge, a novel Synchronous Orderbook Liquidity layer that unifies cross-chain liquidity in DeFi.

Many chains, one cohesive source of liquidity — powered by Vertex.

Edge unleashes the full potential of Vertex’s performant trading engine, unlocking a multi-chain future where liquidity among chains is no longer fragmented. Instead, liquidity from supported Edge chains is fused together, aggregated at the Vertex sequencer level and settled locally on-chain to the origin base layer of a cross-chain Vertex instance.

Edge is primarily a major upgrade to the Vertex sequencer — a custom parallel EVM implementation of an off-chain orderbook and trading engine built in Rust.

Edge amplifies the sequencer’s scope of capabilities, extending them cross-chain to any supported base layer ecosystem.

Conceptually, Edge functions like a virtual market maker between exchange venues on different chains.

The state of the sequencer is split (e.g., sharded) between supported chains concurrently, intaking and cloning inbound orders from each chain. Independent orders from one chain are then matched against liquidity from multiple chains.

Both sides of the trade are filled out, and the sequencer (Edge) takes the opposite side of the inbound trades — automatically hedging and rebalancing liquidity on the back-end between chains.

Notably, the sequencer only mirrors resting liquidity (e.g., maker orders) across the sharded states of the Vertex instances on different base layers. Taker orders remain unchanged, and are submitted directly from an independent Vertex instance, such as the DEX Blitz, to the sequencer’s unified liquidity layer — Edge.

Order matching between chains occurs concurrently, with the state of the sequencer’s consolidated liquidity profile across all of the supported base layers sharded and propagated to each Vertex instance.

As a result, Edge is capable of matching inbound orders from one chain with the combined orderbook liquidity of all of the base layers plugged into the Vertex sequencer.

Edge forges the path for the sequencer to run on multiple (non-Arbitrum) chains simultaneously without fragmenting liquidity between the chains.

You can think of each inbound order from a Vertex instance as a request to modify a balance on-chain. As a result, settlements are just rendered on the specific chains (e.g., Vertex on Arbitrum) where the corresponding balances need to be altered.

More intuitively, you can consider Vertex Edge as a network of highways connecting isolated liquidity islands.

This superhighway of liquidity among the islands doesn’t just connect these islands; it merges them into a continent of shared liquidity. Orders from different blockchains are matched with unprecedented efficiency, thanks to this interconnected liquidity web.

Synchronization of liquidity across multiple chains removes the barriers that cause bottlenecks and fragmented liquidity pools. By weaving together the liquidity profile from multiple chains, Edge provides a means to trade against unified cross-chain liquidity on a single DEX interface without requiring a user to move from Chain A to Chain B.

Traditional cross-chain solutions often divide and dilute liquidity across platforms. Vertex Edge represents a significant departure from this legacy, unifying liquidity across chains, rather than splintering it into isolated hubs.

As Vertex instances proliferate across ecosystems and usage grows, a mutually beneficial scaling of liquidity manifests. For example, usage of a new Vertex instance on a non-Arbitrum chain invokes positive order flow and improves liquidity effects for Vertex on Arbitrum.

Orderbook liquidity on the non-Arbitrum instance is injected into a synchronous orderbook, fusing the liquidity together from both Vertex on Arbitrum and the non-Arbitrum instance of Vertex.

The aggregated liquidity via Edge is accessible by any user of a cross-chain Vertex instance (e.g., non-Arbitrum), displayed as a single, synchronous orderbook on the corresponding app’s interface.

Settlement of matched orders still occurs locally on-chain to the origin chain of the user — providing a net-positive impact on the local chain’s blockspace demand.

For example:

• Assume there are two Vertex instances (Arbitrum and Blast).
• Alice submits a market order (taker) on Blitz, to long the ETH-PERP at price X.
• The sequencer (Edge) matches the order against the best liquidity after examining the orders aggregated across the two Vertex instances on Arbitrum and Blast.
• The best offer is from John who is trading on Arbitrum.
• John is now short on Arbitrum and Alice is long on Blast.
• In the middle, the sequencer (Edge) takes equal opposing positions on each chain. Edge is now short on Blast and long on Arbitrum.
• Edge injects Alice’s matched order into the sequencer queue of batched orders to render and settle on-chain to Blast — simultaneously sending John’s order to be settled on Arbitrum.
• Over time, Edge will continually build long and short positions on local chains.
• Periodically, liquidity between chains will be aggregated and settlement will be made on the backend.

The sequence of steps in the example above execute with the characteristic low-latency performance of Vertex. As such, scaling to multiple chains produces a negligible impact on Edge’s performance, which remains capable of matching inbound orders within 5–15 milliseconds — then settling matched orders in batches on-chain.

In summary, Edge is an upgraded version of the Vertex sequencer, a powerful matching engine coupled with on-chain settlement. Edge simply moves settlement from one chain to many chains.

The outcome is that liquidity fragmentation across chains is supplanted by additive, positive sum orderbook liquidity on a single layer spanning multiple chains.

It’s a superhighway of liquidity between base layer networks. Connect the chains, unify the liquidity — welcome to Vertex Edge.

Rolling Out Vertex Edge — Blitz on Blast

Vertex Edge is the primary cross-chain product, laying the foundation for an alliance of ecosystems injecting their liquidity into a shared, synchronous orderbook liquidity layer across chains.

The expansion of the network plugged into Vertex Edge will begin with the first cross-chain (non-Arbitrum) Vertex Edge instance — Blitz on Blast.

What is a Vertex Edge instance?

Any on-chain smart contract deployment of Vertex on an independent base layer (L1 / L2) is a Vertex Edge instance. For example, Vertex (Arbitrum) and Blitz (Blast) are the original and first instance of Vertex on different L2s, respectively.

A Vertex Edge instance on any base layer contains the following primary properties:

• The liquidity from the chain supported by Edge (e.g., Blitz on Blast) is aggregated and unified at the sequencer level with all of the other Vertex Edge instances (Arbitrum, Blast, Mantle) in a synchronous orderbook liquidity layer.
• The app interface utilizes the same UI kit and back-end as the Vertex app on Arbitrum, but modifies design features and other user-facing elements between Vertex Edge instances on different chains.
• The shared liquidity is accessible by any base layer (Arbitrum, Blast, Mantle) connected to Edge.
• Each Vertex instance will display the combined orderbook liquidity of all the connected chains on the app’s trading interface (e.g., the orderbook). For example, Blitz will display the resting liquidity on the orderbook from both Arbitrum and Blitz.

Blitz is a native on-chain deployment of the Vertex smart contracts to the Blast L2 network.

The Blitz DEX utilizes the same architecture as Vertex on the back-end, and the Blitz app will be a very similar version of the current Vertex app on Arbitrum. The primary differences between Vertex (Arbitrum) and Blitz (Blast) are mostly design modifications.

Under the hood, however, the same blazing-fast performance and hybrid on / off chain model utilized by Vertex on Arbitrum powers Blitz.

What’s the key difference? Edge.

Vertex Edge will officially launch commensurate with the launch of the Blitz app on Blast — meaning the first two chains plugged into Vertex Edge will be the original Vertex app on Arbitrum and Blitz on Blast.

That’s right, Blitz users will be able to trade against a unified, cross-chain reservoir of liquidity from Day 1 on Blitz — meaning Blitz users can tap into Vertex liquidity on Arbitrum out of the gate. To the user, Blitz will retain the intuitive feel of the Vertex app on Arbitrum outside of bespoke design changes and an independent points system.

But the magic is what’s churning under the hood — synchronous orderbook liquidity.

In summary, increased usage of Blitz is value-additive to Vertex on Arbitrum — unified liquidity is synergistic not subtractive. This is a different paradigm for blockchain trading.

Blitz will also launch with all of Vertex’s characteristic features available out of the box, including:

• Spot, perpetuals, and an integrated money market.
• Unified cross-margin across all products.
• Order-matching latency of 5–15 milliseconds.
• 30+ spot and perpetual pairs.
• Embedded AMM.
• Zero trading fees for makers.
• 2 bps trading fees for takers across all markets.
• Scalable liquidity to multiples of TVL.
• HFT-friendly API & SDK (Typescript, Python, and Rust).
• Synchronous access to unified cross-chain orderbook liquidity.

Keep your eyes on the Big Bang Dapp Competition and the imminent launch of your favorite DEX on a new layer two.

Edge does not simply end with Blitz either…

Next up, [Redacted], but you’ll have to stay tuned for more fam.

Hint — more cross-chain instances of Vertex will be supported by Edge throughout 2024.

The Edge Triangle — Distinct Product Features

Vertex Edge’s ability to broaden the scope of the sequencer is unique, applying a uniform standard for multi-chain liquidity sharing across a single, synchronous orderbook.

The design produces several meaningful advantages to both users and the underlying base layer networks supported by Edge. But we’ll leave those examples for the next blog post.

However, it’s important to first examine the unique features that Edge unlocks through the prism of how it impacts Vertex’s core products tied together with unified cross-margin, including:

1. Spot Markets

2. Perpetual Markets

3. Money Market

Spot Trading — Cross-Chain Native Assets: Vertex Edge invokes the ability for a user to trade native spot assets between chains without the direct requirement to access the underlying base layer of a given native asset they want to trade.

• For example, if Alice is using Blitz on the Blast network looking to sell XYZ coin for USDC on Arbitrum, her order is matched with the resting bid liquidity on both Blast and Arbitrum wanting to purchase XYZ coin with USDC.
• Vertex Edge serves as a conduit that closes the gap between these two goals, facilitating a transaction that feels blazing-fast and cohesive, despite happening across two separate blockchain networks.
• This synchronized orderbook is a substantial advantage because it aggregates liquidity, meaning a seller on one chain has access to buyers across multiple chains, and vice versa, optimizing the market depth and potentially reducing slippage.

An intuitive analogy would be an airport duty-free shop serving international passengers — regardless of their flight origin or destination, all passengers can transact in a single location, leveraging the airport’s unified currency exchange system.

This enhances the shopping experience by providing a wider array of options and consistent pricing, similar to how Vertex Edge aims to provide seamless trading across different blockchain networks.

Perpetuals — Interchain Funding Rates & Basis Trading: Market efficiency is optimized as cross-chain liquidity for perpetuals brings the most capital-efficient trading opportunities to traders and risk-takers across ecosystems.

• As additional native spot markets and perp markets are added with Vertex Edge spanning across multiple ecosystems, more opportunities for basis trading will become available.
• Vertex Edge will have unified funding rates, which streamlines trading to be a much more efficient experience than the current alternative, whereby the same protocols on different chains have differing funding rates due to liquidity fragmentation.

Money Market — Multi-Chain Collateral & Unified Interest Rates: Storing collateral locally on multiple chains without the need to bridge assets enables Vertex Edge to offer more collateral options, which in turn increases liquidity and trading efficiency.

• By allowing users to store collateral locally on different chains, Edge can reduce many of the prevailing cross-chain friction points for money markets, potentially increasing market participation.
• For example, in DeFi platforms like MakerDAO or Compound, users can deposit various types of collateral to mint stablecoins or take out loans. If these platforms supported multi-chain collateral without the need to move assets across chains, it could streamline the user experience for borrowing / lending between chains with more options and flexibility.
• More collateral types tend to result in more liquidity as users from various chains contribute to the total collateral pool, increasing efficiency by simplifying the process of collateralization and borrowing.

Applied to Vertex Edge, the synchronous orderbook layer retains Vertex’s embedded money markets, tied together with a user’s entire trading portfolio via unified cross-margin.

This is an important distinction for any Edge instance from incumbent money markets in DeFi — invoking a situation where the interest rate for a given money market pool remains consistent across Edge instances on different chains.

More specifically, Vertex Edge enables a single USDC deposit interest rate across all Vertex Edge instances, enabling capital to flow freely between ecosystems — promoting the active use of capital where it can be best put to use. This generates cheap loans for the most active traders and ensures that passive capital allocators receive optimized yields.

A consistent interest rate curve is a key catalyst that enables cross-chain spot trading. It makes it easier for traders to access assets in different ecosystems without bridging any stablecoins between chains.

Without this capability, tokens remain siloed within their native ecosystem, which is a suboptimal outcome if the goal is additive, synergistic liquidity effects across multiple chains.

The future of liquidity is synchronous. Connect the chains, unify the liquidity — powered by Vertex Edge.

Stay tuned for more details!

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