🏗️How the AMM + Order Book Model Works

Hybrid AMM + Order Book Model

Monday Trade employs a hybrid model that seamlessly integrates an Automated Market Maker (AMM) with an onchain order book, delivering both instant liquidity and precise trade execution on a single platform.

Core Architecture

At the heart of the system is a tick-based architecture, where price levels are discretized into fixed intervals (“ticks”). This framework enables structured liquidity and granular order placement.

The protocol is composed of three main components:

• Liquidity Handler (AMM Management)

• Order Handler (Limit Order Management)

• Swap Handler (Trade Execution)

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AMM Mechanics

The AMM serves as a fallback liquidity source when limit orders are unavailable or insufficient. Traders can always execute trades at the current AMM price.

• Inspired by Uniswap V3, liquidity is concentrated into custom price ranges.

• The liquidity handler calculates active liquidity, i.e., liquidity available in the current price range.

• Swaps are routed through a swap router or custom aggregator, ensuring optimal execution even for less liquid tokens.

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Onchain Order Book

The order book is managed by the order handler and allows users to place limit orders at specific ticks (e.g., "buy ETH at $2000").

• Orders must be placed at ticks above or below the current price, depending on the token pair (e.g., token0 = ETH, token1 = USDC). This reduces arbitrage risks.

• Orders on the same tick are merged for efficiency and clarity.

• Filled orders are automatically withdrawn before new placements can occur at the same tick.

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Swap Execution & Lazy Crossing

The swap handler introduces a novel lazy crossing mechanism, optimizing gas costs while maintaining order book precision.

• Fine-grained ticks are used for order placement, while coarser ticks are used for swap settlement.

• Lazy crossing updates only the necessary swap ticks during trade execution and delays order tick updates until the next relevant order placement.

• A nonce system ensures correctness and prevents desynchronization.

✅ This mechanism delivers up to 98% gas savings — for example, crossing 101 order ticks may only update 2 swap ticks.