Limit Orders
An overview of what Limit Orders are and how they work on Duality
A limit order is an order to buy or sell some amount of tokens at a specific price. If it is a buy order, then when the price goes below the buy order price, it gets filled. This is because the buy order now becomes the highest price someone is willing to buy the token at. When it is a sell order, the order is filled when the price goes above the order price. This is because the sell order becomes the lowest price someone is willing to sell the token at.
Native, automatic limit orders are built into the AMM and allow traders who prefer to trade on an orderbook to do so without moving to another platform. Limit orders are implemented as LP positions on Duality that can only be traded through in a single direction.
Limit orders also give a way for users to trade at a desired price with no slippage in less-liquid token markets.
One issue with concentrated liquidity AMMs in previous iterations are the inability to have native, automatic limit orders. Most limit order implementations either require a trusted 3rd party tasked with poking the smart contract or an escrowed incentive for another user to trigger the execution. In both of these cases, the limit order will still have some risk of crossing back over into the original asset. Building limit orders into the AMM as an additional fee tier where assets can only be traded through in a single direction removes this risk entirely.
Last modified 4mo ago