Batch Auctions

Batch auctions in crypto refer to a trading mechanism where multiple orders are collected over a period of time and executed simultaneously at specific intervals. Unlike continuous trading, where orders are executed individually as soon as they match, batch auctions occur at predetermined intervals, such as every few seconds or minutes.

One example of batch auctions is the mechanism used by decentralized exchanges (DEXs) like Uniswap. In Uniswap's case, trades are batched together and executed through liquidity pools, allowing for more efficient price discovery and reduced slippage compared to traditional order book exchanges.

Another example is the London Stock Exchange's closing auction, where orders are batched and executed at the end of the trading day, helping to determine the closing price of securities.

Batch auctions are favored for their ability to reduce volatility and market impact, as well as providing fairer execution prices for all participants. They are particularly useful in markets with low liquidity or high-frequency trading.