What is DeepBook: A CLOB Built on Sui

DeepBook’s Positioning: The “On-chain NYSE” of the Sui Ecosystem

DeepBook is a decentralized central limit order book (CLOB) built on the high-performance public chain Sui, aiming to provide DeFi protocols with trading efficiency and liquidity depth similar to traditional financial markets. Unlike DEXs that rely on the automated market maker (AMM) model, DeepBook uses a limit order book to match buy and sell orders in real time. It supports market orders, limit orders, and bulk order splitting, reducing the average trading slippage to below 0.05%. This design allows both institutional market makers and retail investors to precisely control pricing, making it especially suitable for complex liquidity provisioning strategies.

Since its mainnet launch in July 2023, DeepBook has become the liquidity hub of the Sui ecosystem, supporting over 80% of the trading volume of top protocols such as Cetus and Kriya. As of April 2025, its cumulative trading volume has surpassed $27 billion, accounting for 35% of the total transaction volume on Sui. Users can track DeepBook’s liquidity distribution and capital flow in real time through JuCoin’s on-chain data.

Technical Breakthroughs: Sui’s Parallel Execution and Order Book Architecture

The performance advantage of DeepBook stems from the underlying technical innovations of the Sui blockchain:

High Throughput and Low Latency

Sui’s parallel processing capability allows it to handle 5,414 transactions per second, with confirmation times as fast as 500 milliseconds and gas fees below $0.001. This performance enables DeepBook’s order matching speed to rival traditional exchanges like Nasdaq.

Modular Design

DeepBook brings the order book logic fully on-chain while allowing developers to customize trading strategies via its SDK. For example, liquidity providers can set dynamic price ranges or auto-adjust orders based on specific market volatility conditions.

Balance Between Privacy and Transparency

All orders and trade records are publicly accessible, but user identities are anonymized through zero-knowledge proof technology, protecting trader privacy.

The V3 upgrade in October 2024 introduced flash loan functionality, enabling users to borrow assets instantly without collateral for arbitrage, opening up new strategic space for quant teams and institutional investors.

DEEP Token: Governance and Value Capture Mechanism

DeepBook launched its governance token DEEP in October 2024, marking a shift from being technical infrastructure to a community-driven ecosystem. The core utilities of DEEP include:

• Fee Discounts: Staking DEEP can reduce trading fees by up to 50%, incentivizing long-term holding.

• Governance Voting: Token holders decide on protocol parameter changes such as liquidity pool fees and cross-chain support priorities.

• Revenue Sharing: 30% of protocol revenue is distributed to DEEP stakers, forming a sustainable yield loop.

Out of the total supply of 10 billion tokens, 61.57% is allocated for ecosystem incentives, such as rewarding market makers that bring liquidity to Sui DeFi protocols. This mechanism pushed DEEP’s market cap from $50 million to $150 million within three months, making it one of the top three tokens in the Sui ecosystem. Recently, DEEP was listed on Binance Futures, and there is growing speculation about its spot listing on Binance, JuCoin, and other major exchanges.

Challenges and Controversies: Compliance and Ecosystem Tensions

Despite impressive metrics, DeepBook faces three core challenges:

1. Regulatory Uncertainty: Under the EU’s MiCA regulations, DEEP may be classified as an “unregistered security,” potentially restricting European users from accessing key protocol features.

2. Liquidity Fragmentation: The cross-pool sharing mechanism introduced in V3 improves capital efficiency but intensifies competition among protocols for liquidity, requiring governance coordination for mutual benefits.

3. Rising Competition: Solana’s Pump.fun has captured 40% of the on-chain order book market share, while Binance and other CEXs are testing their own on-chain CLOB solutions, which may siphon off users and funds.

Additionally, DeepBook’s flash loan function carries a risk of exploitation by hackers. In December 2024, an attacker manipulated Kriya’s oracle price via flash loans, causing a temporary liquidity drain and resulting in a loss of approximately $1.2 million.

Outlook: From Liquidity Layer to Financial Infrastructure

DeepBook’s roadmap shows ambitions beyond trade matching:

• Cross-Chain Expansion: The Q2 2025 testnet will support Solana and Polygon assets, enabling multi-chain liquidity aggregation.

• Derivatives Market: Plans to launch perpetual contracts in collaboration with Kriya, leveraging DeepBook’s real-time price discovery to reduce contract premiums.

• Institutional Services: Working with market makers like Wintermute and GSR to develop dark pools for large-volume anonymous trades.

A Sui Foundation executive described DeepBook as “building a permissionless Wall Street,” suggesting that its technical framework could become a model for next-gen financial infrastructure. For average users, participating in such innovation requires balancing returns with risks. Diversified investments and real-time monitoring are advised to manage exposure.