Create Limit Orders
Last updated
Last updated
Pulsar's robust infrastructure now allows you to add an important tool in your trading arsenal; limit orders.
Similar to an orderbook system of centralized exchanges (CEXs), limit orders allow you to buy/sell an asset at a specific predetermined price, allowing the order to be filled at an indeterminate time in the future.
With limit orders on StellaSwap's V3, users can now create limit orders decentrally by providing a single asset as liquidity within a specific range.
Creating limit orders entail the use of deliberately being OOR.
Previously, a normal liquidity position goes OOR when the market price falls outside of your initial price range that you set when adding liquidity.
For example, if you provided liquidity for GLMR-USDC pool at a range of $0.30 - $0.60 at the start and after a few days, the market price goes to $0.70, then your position is considered "Out-of-Range".
Although accidental OOR isn't good (since you need to amend your positions), intentional OOR for limit orders serves a vital tool in allowing you to mitigate your risks.
With this new enhancement, you could create an OOR position from the outset. All you need is a single asset! While you would not be getting any rewards when you are out of range; there is an important function enabled by this OOR position which are limit orders.
In centralized trading, a limit order is a specified price for selling an asset that would only be triggered once the asset reaches set price in the order.
In simple words, creating a conditional trade that only executes if the price for an asset reaches the predetermined point. An example is creating a limit buy order for BTC at $40,000; your buy order only executes if BTC;s price reaches $40,000.
Since a DEX is fundamentally different compared to a traditional orderbook system, a new way to achieve the same outcome of limit orders need to be created.
Example: Price for 1 GLMR is now $0.26. If I'm holding USDC and is keen to buy GLMR only below $0.25, I can do so by providing OOR to the pair and set my range to below $0.25. Therefore, my liquidity would only be utilized once it is in range. The best part is that I would only be providing USDC since my OOR is below the current price!
The opposite can also be done, where you could provide GLMR and only sell it at a certain price higher than the prevailing market price; AKA sell limit order.
Example: You could create a position on GLMR-USDC pair that only sells GLMR for at least $0.3 by setting the range to that amount. In this case you would only be providing GLMR tokens when depositing liquidity.
