Order Book
What an order book is, and the terminology behind it.
An order book is a trading protocol used primarily in stock exchanges and, increasingly, in crypto. A matching engine reads the book to determine which orders can be fully or partially executed against each other.
Buyers and sellers
The two participants in an order book are the buyer and the seller:
- A buy order (a bid) offers to buy a certain amount of a token at a specific price.
- A sell order (an ask) offers to sell a certain amount at a specific price.
The matching engine keeps a list of bids and asks and pairs any that satisfy both sides. A trade happens when a bid's price meets or exceeds an ask's price.
Reading a depth chart
An order book depth chart shows the cumulative bids and asks for a market. By convention, buys are drawn on the left and sells on the right; the x‑axis is unit price and the y‑axis is cumulative order depth. It's a standard analytical tool — the steeper the wall on one side, the more liquidity is stacked there.
Terminology
Price point — When multiple orders share the same price, they form a price point. A bid arriving at that level can be filled by the sell orders sitting there (and vice versa).
Top of the book — The highest bid and the lowest ask. The gap between them is the spread.
Book depth — The number of price levels available in the book at a given time.
Because Nightshade's order book lives on‑chain, anyone can verify every bid, ask and fill — there's no hidden or off‑chain matching.