Market Prices for Order Flow

On DFlow, the right to execute orders is determined through a market-driven auction mechanism which means market prices, for the first time, can be assigned to order flow (i.e. a batch of orders). Market prices for order flow will be shown like stock prices and be an integral part of the DFlow Dashboard.

The price is derived from the winning bid of an auction, which is always for one specific token pair. For example, $1 million of ETH–USDC flow between $10 and $50 may be currently worth 1000 USDC. Each auction is created based on a set of standardized specs – see Auction Parameters for exact auction parameters.

Order flow sources can use this live price to make calculations for what this means for their potential earnings. Similarly, market makers can use it as a reference when bidding for order flow. The market price is updated live as new auction winners are announced.

As a comparison, in traditional stock markets, PFOF is conducted behind-the-scenes over contracts between the brokerage firm and the market maker (e.g. Robinhood and Citadel). Price and contract terms are both opaque, leading to a nonideal form of price discovery of order flow.