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Trading protocols Meaning

Trading protocols define the rules and mechanisms governing how trades are executed, matched, and settled. They standardize interactions between market participants and trading venues.

In crypto markets, protocols range from centralized exchange APIs to decentralized smart-contract-based systems such as AMMs and RFQ mechanisms. Each protocol type has distinct trade-offs in transparency, speed, and control.

Protocol design directly impacts liquidity access, price discovery, and market fairness. Poorly designed protocols may introduce inefficiencies or exploitability.

Robust trading protocols ensure consistent execution behavior and predictable outcomes across participants.

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