On-chain limit orders are orders placed on a blockchain that specify the maximum or minimum price at which a user is willing to buy or sell a particular asset. These orders are executed automatically when the market price of the asset reaches the specified price, allowing users to trade assets without the need for a third-party intermediary. They provide a convenient way for users to trade assets in a trustless and transparent manner, without having to rely on a central authority to match buyers and sellers.
In the past, traditional tick logic imposed limitations on our ability to distribute liquidity within a range. However, through recent innovations, Dfyn V2's AMM has introduced "Limit Order Ticks," which allow for highly concentrated liquidity on a single tick, resulting in enhanced price precision. This enables users to add limit liquidity at a precise price, similar to how order book exchanges operate.
There are several potential benefits to using on-chain limit orders:
Automation: On-chain limit orders are executed automatically when the market price reaches the specified price, allowing for seamless and efficient trading without the need for a third-party intermediary.
Assurance : With our limit liquidity being embedded on the curve itself when the price passes a certain price point limit order at that point is bound to get filled. Without exhausting the limit order liquidity at that price point market price is will not go further. Hence giving an assurance of order fill.
Transparency: Because on-chain limit orders are executed on a blockchain, they provide a transparent and verifiable record of all trades. This can help to build trust and confidence in the market.
Security: On-chain limit orders are facilitated by smart contracts, which provide a secure and tamper-proof way of executing trades. This reduces the risk of fraud and ensures that users retain control over their assets at all times.
Cost savings: On-chain limit orders can help users to save on trading fees, as they do not require the services of a central authority to match buyers and sellers.
Accessibility: On-chain limit orders enable users to trade assets on decentralized exchanges, which can be accessed from anywhere in the world with an internet connection. This can provide greater access to global financial markets for users who may not have access to traditional financial services.