In the five supply models overview, the market model is described as the “fifth” — the secondary circulation model. But it’s this model that determines whether a token can survive after launch. Allocation creates tokens, the reward model distributes them — and the market model provides pricing and liquidity. Without it, a token is just a number on the blockchain with no way to exchange it.
Three fundamentally different mechanisms exist: order book (orderbook), automated market maker (AMM), and intent-based trading. Each solves the liquidity problem differently, with different trade-offs. This article compares them from the tokenomist’s perspective — the person designing the system, not just trading in it.
Order Book
The classic mechanism inherited from traditional finance. Two types of orders — buy (bid) and sell (ask) — are arranged by price. A trade executes when bid ≥ ask.
How It Works
- P_mid — mid price (computed, order-book concept)
- P_bid — best buy order
- P_ask — best sell order
- The difference (P_ask − P_bid) is the spread — the primary liquidity metric
- Note: mid-price is specific to order books; AMMs derive a single instantaneous price from the pool curve (see AMM section)
| Characteristic | Value |
|---|---|
| Pricing | Determined by participant orders |
| Liquidity | Provided by market makers |
| Capital efficiency | High — liquidity concentrated around the price |
| Minimum volume | Requires significant trading volume |
| Where used | CEX (Binance, OKX), some DEXs (dYdX v4, Hyperliquid, Injective Helix) |
The Role of Market Makers
In an order book, liquidity doesn’t appear automatically. It’s provided by market makers (MMs) — professional participants who simultaneously place buy and sell orders.
A market maker earns from the spread and receives compensation from the project:
| Parameter | Typical value | Purpose |
|---|---|---|
| Spread | 0.1–0.5% | MM revenue per trade |
| Order book depth | $50K–$500K per side | Resilience to large trades |
| Project compensation | 1–5% of total supply + fees (typical band; the spread depends on MM tier, CEX tier, and contract length — top-tier MMs on tier-1 exchanges cluster at 3–5%) | Attracting MMs at launch |
| Contract term | 6–12 months | Minimum partnership horizon |
When to Choose an Order Book
- The project plans a CEX listing (centralized exchange)
- Budget available for a market maker ($50K–$300K per contract)
- Expected trading volume > $100K/day
- Maximum capital efficiency is required
Automated Market Maker (AMM)
AMM replaces the order book with a mathematical formula. Liquidity is stored in a pool — a smart contract holding reserves of two (or more) tokens. The price is determined automatically with every trade.
A detailed breakdown of AMM mechanics, formulas, and types is in the dedicated article. Here — key characteristics from the supply model perspective.
Base Formula
- Constant Product Market Maker (Uniswap V2)
- x, y — reserves of two tokens in the pool
- k — constant, preserved on each swap (excluding the 0.3% fee)
Key Parameters for a Tokenomist
| Parameter | What it determines | Typical value |
|---|---|---|
| Initial liquidity | Pool depth at launch | $50K–$1M per pair |
| Pool fee | LP revenue, trader cost | 0.05%–1% |
| AMM type | Pricing curve shape | CPMM, StableSwap, CL |
| Liquidity range | Concentrated (V3) or full-range | Depends on volatility |
Slippage — The Key Metric
Slippage — the difference between the expected and actual trade price. It depends on the trade size relative to pool depth.
- Delta_x — trade size in token X
- x — reserve of X in the pool
- At Delta_x = 1% of x, slippage is ~1%
- At Delta_x = 10% of x, slippage is ~9.1%
| Trade size (% of pool) | Slippage (CPMM) | Slippage (StableSwap) |
|---|---|---|
| 0.1% | 0.10% | ~0.01% |
| 1% | 0.99% | ~0.10% |
| 5% | 4.76% | ~0.50% |
| 10% | 9.09% | ~1.00% |
When to Choose AMM
- The project launches on-chain (not on a CEX)
- No budget for a professional market maker
- Liquidity needed from day one (permissionless)
- The community can serve as liquidity providers
Intent-Based Trading
The newest model, where the user doesn’t place an order directly but declares an intent: “I want to swap 1 ETH for the maximum amount of USDC.” Specialized participants — solvers — compete to fulfill this intent.
How It Works
- User creates an intent: signs a message describing the desired trade (what they give, what they want, constraints)
- Solvers find the best path: analyze order books, AMM pools, OTC, and their own liquidity
- Solver auction: solvers compete for the right to execute the intent, offering the best price
- Execution: the winning solver executes the trade, the user receives tokens
- P_user — price for the user (computed)
- P_amm — AMM price
- Fee_solver — solver’s fee
- In practice, solvers often deliver a price better than AMM by aggregating liquidity
Advantages
| Advantage | How it works |
|---|---|
| Better price | Solvers aggregate liquidity from multiple sources |
| MEV protection | Intent is executed atomically, no public transaction before execution |
| Cross-chain | Solver can use liquidity from different networks |
| Solver pays gas | User signs an intent, not a transaction |
Current Implementations
| Protocol | Solver model | Volume (2025) |
|---|---|---|
| CoW Protocol | Batch auctions | ~$3–9B/month (DefiLlama; ATH ≈$9B in Jul 2025) |
| UniswapX | Dutch auction of solvers | ~$1–2B/month |
| 1inch Fusion (same-chain + Fusion+ cross-chain) | Limit orders via solvers | Fusion+ ≈ $700M/year cross-chain (Messari Q2 2025); combined figure varies — check the 1inch public dashboard |
| Across Protocol* | Cross-chain intents | ~$1B/month ($19B cumulative by late 2025) |
*Across is a cross-chain bridge, not a spot swap venue — its throughput represents cross-chain transfers rather than in-venue swaps, so it is not directly comparable to CoW/UniswapX/1inch.
Comparing the Three Models
| Criterion | Order Book | AMM | Intent-Based |
|---|---|---|---|
| Pricing | Participant orders | Mathematical formula | Solver auction |
| Liquidity | Market makers | LP pools | Aggregation of all sources |
| Startup costs | $50K–$300K (MM contract) | $50K–$1M (initial pool) | Solver network integration |
| Capital efficiency | High | Low (CPMM) / Medium (V3) | High |
| MEV protection | Low (frontrunning) | Low (sandwich) | High |
| Cross-chain | Via bridges | No (single-chain) | Native |
| LP entry barrier | High (professionals) | Low (anyone) | Medium (solvers) |
| Technology maturity | Decades | Since 2018 | Since 2021–2022 |
Slippage and Liquidity Cost Calculator
Compare trade costs: order book vs AMM vs intent-based at different volumes and liquidity levels.
How to Choose a Model
The choice of market model depends on the project’s stage, budget, and target audience.
Decision Tree
- Planning a CEX listing? Yes — order book (the CEX provides the infrastructure). No — go to step 2.
- Budget allows professional range management? Yes — AMM with concentrated liquidity (Uniswap V3): concentrated liquidity rewards active management and larger LP positions, so it pays off when the treasury can afford to rebalance ranges as volatility shifts. No — AMM with basic CPMM (set-and-forget, lower capital efficiency but no active management required).
- Need cross-chain from day one? Yes — integrate with intent-based protocols. No — start with AMM, add intent later.
- High volume of small trades? Yes — AMM (less slippage on small volumes). No (large trades) — order book or intent.
Combining Models
In practice, mature projects use all three:
| Project stage | Primary model | Complement |
|---|---|---|
| Launch (months 1–3) | AMM on DEX | — |
| Growth (months 3–12) | AMM + CEX listing | Order book on 1–2 exchanges |
| Maturity (12+ months) | Order book on multiple CEXs | AMM for the long tail, intent for aggregation |
Common Mistakes
Market model pitfalls
Impact on Tokenomics
The market model isn’t just “where to trade.” It affects the entire tokenomic architecture:
- Allocation: a “liquidity” pool (5–15% of total supply) is needed to seed the AMM or compensate the market maker
- Vesting: large unlocks create sell pressure — liquidity depth must absorb them without crashing the price
- Stakeholders: market makers and liquidity providers are separate groups with their own interests in the stakeholder matrix
- Utilization mechanisms: staking reduces circulating supply, improving liquidity for remaining tokens
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