Architecture

Tycho Orderbook SDK works as follows.

SDK flow

1. The Trader opens a stream

   1. It connects to Tycho Indexer

   2. It receives all updates (each block) on the state of the liquidity pools and the state for simulating the swap on

2. The Trader requests a specific orderbook, e.g. ETH-USDC (base-quote)

   1. By default, the SDK uses a simplistic single-hop solver to simulate optimal routing between pools, but any solver can be used.

   2. Multiple trades are quoted ⇒ 1, 10 or 100 ETH for bids, then 2K, 20K, 200K USDC for asks. Thousands of simulations can be performed in just a few seconds

3. Aggregate the output in bids and asks.

4. Loop to constantly monitor status updates.

For example, a Binance-formatted version of an orderbook would contain the following data on pair BTC-USDC.

Binance-like onchain liquidity orderbook

Expressed literally, this means that you can sell, for example, 82 BTC at a price of 76021 USDC, or you can buy 37 BTC at a price of 83098 USDC. The current price is between 81984 USDC and 82063 USDC, with a spread of 79 USDC, which is mainly due to cost of gas (on Ethereum mainnet).

On the basis of this familiar format, a trader can connect a TradFi orderbook algorithm and execute and operate onchain with ease.