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Trading Methods
The exchange of goods, services, securities, or tokens is essential for any functioning market. Below are the primary ways assets are traded on the blockchain.

DEX market snapshot

Popular on-chain exchanges and their off-chain counterparts.

Common trading methods

Central limit order book (CLOB)
CLOB is the most widely used exchange method in traditional markets. An order book provides liquidity and price discovery for assets by having market makers put up bid and ask prices. While market makers provide liquidity, market takers take liquidity off the order book (e.g. Bob market buys 50 SOL at $10).
The primary reason CLOBs are not prevalent on-chain is because Ethereum, the largest L1, has high gas costs which make putting up and cancelling quotes very expensive for market makers. What makes Solana special is its high throughput and low transaction costs, which allowed Serum to build an on-chain CLOB.
Automated market maker (AMM)
AMMs were made popular by blockchain constraints. Instead of an order book, AMMs enable price discovery through pooled capital from liquidity providers (LPs). The LPs on AMMs are similar to the market makers on order books; however, LPs are mostly passive and do not quote bid and ask prices (concentrated liquidity is an exception). Pricing of assets is done by market forces based on a mathematical formula such as the constant product formula, x * y = k.
Request for quote (RFQ)
RFQ is a very common way to trade OTC products (like corporate bonds) but is not as common on the blockchain. As the name suggests, market takers request quotes (e.g. request to buy 10 SOL) from market makers and pick the best one. RFQ is generally preferred for large illiquid positions.
Auction
​Auctions, both English and Dutch auctions, are available for selling NFTs (although most NFT sales still use fixed prices). Dutch auctions are also seen in DeFi loan liquidations and DFlow uses auctions to sell order flow to market makers.
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Outline
DEX market snapshot
Common trading methods