A list of buy and sell orders organized by price, used by exchanges to match trades.
An Order Book is a structured list of buy and sell orders for an asset, organized by price level. Exchanges use order books to match makers (limit orders) with takers (market orders).
Order books are essential to price discovery and liquidity in both centralized and decentralized markets.
What Order Books Contain
Bid prices: Buy orders
Ask prices: Sell orders
Order sizes: Amount of asset at each price
Spread: Difference between the highest bid and lowest ask
Depth: Total liquidity across price levels
This information determines how trades execute.
Order Book Types
Centralized exchange order books (managed by matching engines)
Decentralized order book DEXs (on-chain or hybrid models)
AMMs do not use order books, but they simulate pricing curves using liquidity pools.
Summary
An order book lists buy and sell orders by price, enabling efficient trade matching and price discovery.
