Awesome Archive of Assets on Decentralised Exchanges
- On most centralized exchanges using order books (and on early DEXs using order books),
- It was possible to use a type of order called the Limit Order.
- This allowed traders to set the maximum or minimum price at which they are willing to buy or sell their digital assets.
- Market orders are transactions meant to execute as quickly as possible at the current market price.
- Limit orders have made centralized exchanges more convenient and profitable than DEXes
- You can submit an order to buy or sell a token only if it falls or rises to your desired price.
- Modern DEXs run on automated market maker protocols, doing away with order books and providing liquidity via pools of trading pairs.
- Anyone is able to contribute their assets to these liquidity pools;
- These liquidity providers are incentivized to do so
- It is done by sharing portions of the fees and commissions generated by every swap made in the pool.
- DEXes like Uniswap and SushiSwap uses market order method
- It means that buy or sell transaction will execute as quickly as possible at the current market price
- it’s the assurance of execution, rather than assurance of price, that is important in market orders.
- In the event of a sudden volatitility, then a swap could actually execute at a price very different from what was expected.
- Especially with low liquidity or low-volume pairs, swapping can result in high slippage and, therefore, a high price impact.
- A Stop Loss would allow traders to set a maximum allowable loss by activating a market order once a stop price has been met.