The Cardano DeFi problem
Cardano’s smart contract platform doesn’t support concentrated liquidity market maker pools or other capital-efficient designs. The market is dominated by constant product AMM DEXes — the least capital-efficient model in DeFi. This creates several compounding issues:Slow price adjustment
Pool prices lag behind actual market movements, creating stale quotes.
Poor execution
Wide spreads and high slippage mean retail traders get worse prices.
High fees
Network fees of 1–1.5 ADA per order, plus batcher and DEX fees, make frequent trading expensive.
Fragmented liquidity
Liquidity is scattered across multiple pools, venues, and trading pairs.
Shadowbook’s solution
Shadowbook replaces the AMM model with a hybrid orderbook architecture designed for Cardano’s eUTxO ledger.Virtual orderbook for makers
Market makers connect directly to the Shadowbook matching engine and place virtual limit orders. These orders live off-chain — they’re placed and cancelled instantly with no transaction fees and no on-chain footprint. This removes the cost barrier that prevents active market making on Cardano.On-chain settlement for takers
When a taker matches an order, the trade settles on-chain through Shadowbook’s smart contracts. Takers submit on-chain orders (limit or market) that the protocol’s execution engine fulfills when conditions are met. The on-chain component handles custody, so takers retain full self-custody throughout the process.Capital efficiency
By concentrating maker liquidity in a real orderbook rather than spreading it across a bonding curve, Shadowbook delivers:- Tighter spreads — makers quote competitive prices at specific levels instead of relying on a mathematical curve
- Lower slippage — aggregated depth at each price level means larger orders execute with less price impact
- Faster price discovery — makers can update quotes instantly in response to market movements
Fee structure
| Order type | Execution fee | On-chain cost |
|---|---|---|
| Market order | 0.6 ADA | Standard network fee |
| Limit order | 1.8 ADA | Standard network fee |
| Virtual order (maker) | Free | None |
| Order cancellation | None | Standard network fee |
Protocol integration
Shadowbook doesn’t operate its own trading interface. Instead, it plugs into existing Cardano infrastructure as a liquidity source:- DexHunter — live integration as a trading venue
- Other DEXes and aggregators — planned future integrations