Order book

An order book is like a big market made up of many small markets, each with its own fixed price for trading two assets. Imagine you're in a market where you can trade USDC for another asset, let's call it Token X. In this market, there are many small stalls (or mini-markets), and each stall offers a different price for trading USDC and Token X.

For example, at one stall, 1 Token X might cost 10 USDC. This means if you want to buy Token X, you need to pay 10 USDC for each one. This is the only price you can trade at this particular stall. If you go to the next stall, the price might be 11 USDC for 1 Token X. Again, at this stall, you can only trade at this price of 11 USDC per Token X.

In this market, there are two types of people: the ones who set up these stalls (the order makers) and the ones who come to buy or sell (the takers). The order makers are like shopkeepers who decide at what price they're willing to buy or sell Token X. They provide the tokens and USDC for trading. The takers are like customers who come to these stalls and decide whether they want to buy or sell at the prices offered by the makers. When a taker decides to buy or sell at a stall's price, a trade happens, using up some of the tokens or USDC that the maker provided. This continues until the taker has bought or sold the amount they wanted.

ION names each market a Bin.

While an order book is a general term referring to a list of buy and sell orders for a financial instrument, a Central Limit Order Book (CLOB) is a specific type of order book used to organize those orders, for order matching. Even though they are related concepts, CLOB is a subset of the broader category of order books.