# Hybrid Execution Model (CLOB / AMM)

Nunchi's matching engine is a Hybrid Execution Model, engineered to combine the performance of a CLOB with the constant, on-chain liquidity of an AMM, all settled atomically within a single transaction.

1. Primary Venue: The Onchain CLOB: This is the primary matching engine where professional market makers place limit orders. It is designed for low latency and provides complete transparency. Makers are incentivized with significant fee rebates.
2. The Binned AMM: Any portion of a market order that cannot be filled by the CLOB automatically "falls back" to our integrated AMM. We use a "Liquidity Book" model, where passive LPs deposit assets into discrete price "bins." This concentrates liquidity where it's needed most. An Automated Bin Manager rebalances these bins to track the oracle price, providing a "set-and-forget" experience for LPs. Crucially, the AMM is designed to never undercut the best price on the CLOB, protecting active makers. The Binned AMM is not funded by separate LPs. Instead, its liquidity is programmatically supplied by the Junior (Stablecoin) Tranche of the central Nunchi LP Vault, under the direction of the Automated Bin Manager. Each time liquidity moves to a bin, a proxy order is submitted to the CLOB, which allows for the AMM and the CLOB to seamlessly integrate. 
3. The Final Defense- the JIT Liquidity Auction: In rare cases of extreme volatility where both the CLOB and AMM are insufficient, a Just-in-Time (JIT) Liquidity Auction is triggered. This on-chain flash auction allows professional makers to compete to fill the order at a better price, intercepting "toxic flow" before it can harm passive LPs.


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