## Why Order Books?
The most important building block for finance is the **central limit order book**, and DeFi so far has been built in the absence of this core infrastructure sacrificing capital efficiency. So far DeFi's value came from enabling permissionless access to financial instruments, but in the long run decentralized finance needs to be on par with TradFi regarding capital efficiency and order books are the only way to do that. The first wave of DeFi with AMMs, lending pools, and liquidity vaults which all try to compensate for the lack of an order book, are now being challenged by the second wave of DeFi, products like HyperLiquid, Aevo, Lyra V2, which are all order book based protocols.
## Why Fully On-chain?
So what does it mean to be fully on-chain? This means that order flow, order matching, and settlement are all done on-chain. In this system, placing and canceling orders, market orders that match with limit orders, and claiming the proceeds of a filled limit order are all executed through user transactions.
By having every aspect of the order book on-chain, we can achieve complete composability. This means that the liquidity on these order books can be used by other protocols such as aggregators and money markets seamlessly. In fact, each limit order is an NFT on its own.
## Why Sei?
On-chain order books don’t work unless the chain is fast and cheap, hence we have yet to see one take off on EVM when Serum on Solana showed it's possible. The biggest difference between EVM and SVM is localized fee markets and parallization which is what Sei is offering, but on EVM. With Sei, on-chain order books can finally be supported on EVM and we’re expecting Seirum to be the backbone infrastructure for trading on Sei.
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