Kromatika FELO (Fees Earning Limit Order) is an iconic name for Kromatika\u2019s decentralized Limit Order because of its method of earning fees for users who place limit orders via Kromatika.<\/p>\n
Allow me to take you back to the beginning; The core principle of any trading DEX or CEX is its ability to execute buy\/sell\u00a0orders.<\/p>\n
The orders can either be market orders or limit orders. Market orders execute instantly, while limit orders are placed to execute at a certain price\u00a0target.<\/p>\n
Since market orders can easily be implemented on every DEX as a swap transaction, only a few DEXes propose a truly decentralized Limit Order\u00a0feature.<\/p>\n
Here we\u2019ll look at how the Swap (market order) works and its Pros and\u00a0Cons<\/strong><\/p>\n In a DEX, the swap can work in two major\u00a0ways:<\/p>\n Automated Market Maker\u00a0(AMM)Order Book\u00a0DEXes<\/p>\n Automated Market Maker:<\/strong> As the name implies \u201cAutomated\u201d this relies on smart contracts which use pre-funded pools of assets known as liquidity pools to allow users to trade assets with each other instead of matching buy\/sell orders like that of the Order Books. The pool is funded by LPs (Liquidity Providers) and they deposit an equivalent value of the assets when adding liquidity to the\u00a0pool.<\/p>\n Order Book DEXes: <\/strong>This method is usually seen on CEXes and it works by compiling records of all open orders to buy and sell assets for specific asset pairs. Buy orders signify that a trader is willing to bid for an asset at a specific price while Sell order indicates that a trader is asking a specific price for the assets under consideration.<\/p>\n This can be either on-chain or off-chain\u200a\u2014\u200aon-chain usually for DEXes and off-chain usually for\u00a0CEXes.<\/p>\n PROS<\/strong><\/p>\n Easy to\u00a0UseEasier to\u00a0executeImmediate settlement<\/p>\n CONS<\/strong><\/p>\n Price slippage can\u00a0occurSpread between buy and sell price can be controlled by the\u00a0exchangeMEV Exposed<\/p>\n And now, let\u2019s look at limit\u00a0orders<\/strong><\/p>\n A limit order in the financial markets is a direction to purchase or sell an asset at a specified price or better. This stipulation allows traders to exercise better control of the prices at which they trade. A limit can be placed either as a buy or a sell\u00a0order:<\/p>\n A buy limit order will be executed only at a lower price than the current market\u00a0priceA sell limit order will be executed only at a higher price than the current market\u00a0price<\/p>\n Using a limit order, it is easier to exercise control over your entry\/exit strategies. A lot of CEXes offer this feature. However, when you switch over to a decentralized setting like DEXes, it becomes a very complicated affair. Hence, the limit orders offered on most DEXes are a form of \u201cDelegated Delayed Swap\u201d<\/em><\/strong> instead of a <\/em>true limit order<\/em><\/strong>. Read on as we explore what this\u00a0means.<\/p>\n A lot of DEXes that offer limit order features are not fully Decentralized but rather Centralized as these DEXes rely on market makers to process its limit\u00a0order.<\/p>\n On most DEXes, the Limit Orders are usually a \u201crequest for quote\u201d\u200a\u2014\u200aa method where the user (called the Maker) who wants to exchange a token creates an offer. This offer is then published on the DEX\u2019s centralized database, where another user (called the Taker) will decide to take it. This takes out the decentralized aspect of limit orders and it functions as a \u201cDelegated Delayed\u00a0Swap\u201d<\/p>\n To summarize, when a user places a limit order on the DEX, the DEX keeps the limit order pending for another user (called the Takers) who\u2019d pick the order to fulfill when it reaches the user\u2019s price target. In a way, it works similar to P2P (Peer to\u00a0Peer),<\/p>\n Example: 1Inch limit\u00a0orders.<\/p>\n Fig. 1. 1inch Centralized Limit\u00a0Order<\/em><\/p>\n In the context above, we\u2019ve seen how the Centralized limit order works and its limitations because the taker can choose not to fill your\u00a0orders.<\/p>\n Now, let\u2019s look at how Kromatika has overcome these problems by creating a truly decentralized limit\u00a0order.<\/p>\n The Limit Order on Kromatika works by this schematics below<\/p>\n Fig. 2. Kromatika FELO Schematics<\/em><\/p>\n Hierarchy:<\/strong><\/p>\n The user creates a limit order on KromatikaKromatika adds the users liquidity on Uniswap V3 and registers the Chainlink KeeperThrough Uniswap V3 Concentrated Liquidity and Range Order, Kromatika add the input tokens as LP on Uniswap\u00a0V3When the price enters the target range, LP earn fees and input token is being exchanged for the target\u00a0tokensWhen the price reaches the users set target price, the limit order is filled 100% and the Chainlink Keeper triggers KromatikaKromatika removes the output token from LP together with the accrued fees and sends it to the\u00a0User.<\/p>\n To read more on this, Here\u2019s an article on Kromatika FELO<\/a>.<\/p>\n Kromatika Limit Order (FELO) doesn\u2019t work like other DEXes limit order or\u00a0swap.<\/p>\n The regular DEXes limit order makes use of market makers which is not decentralized because the market maker works like P2P (Peer\u200a\u2014\u200ato\u200a\u2014\u200aPeer) that has to match orders for users and it has to be filled by anyone (the\u00a0taker).<\/p>\n Kromatika FELO leverages on Uniswap V3 Concentrated Liquidity mechanism to protect users from price slippage as Kromatika limit order adds liquidity on Uniswap V3 and uses battle proven network of decentralized Chainlink Keepers to monitor and remove liquidity in real-time. This makes the process fully decentralized as it\u2019s automated instead of having to remove liquidity manually (if it were done on Uniswap V3 directly).<\/p>\n Also, users often experience partially filled orders in centralized limit orders as a result of the taker not willing to fill the order if there\u2019s a huge volume spike in the market. This is because the taker would prefer to find arbitrage opportunities instead.<\/p>\n In Kromatika FELO, the execution of Limit Orders is not time dependent since this leverages Uniswap V3 concentrated liquidity which relies on market volume and target price. Limit orders can be 100% filled here even if there\u2019s a huge spike in the market as long as it\u2019s coupled with\u00a0volume.<\/p>\n Concentrated liquidity simply allows LPs to concentrate their capital at custom price ranges within their desired price and offers more capital efficiency for\u00a0LPs.<\/p>\n Concentrated liquidity comes with another benefit \u201cFees\u201d and this time, you\u2019re the one earning the fees. As per their name, Kromatika FELO earns you some fees during the order filling, read more in this specific article Kromatika FELO<\/a> and also you can read more on Concentrated Liquidity<\/a> here.<\/p>\n Having seen the Pros and Cons of how Swap Order Feature works, let\u2019s compare the Swap and Limit Order in terms of Capital Efficiency<\/em>.<\/p>\n Benefits and Limitations of Swap vs Limit\u00a0Order<\/strong><\/p>\n Here are some Key takeaways to\u00a0Note:<\/em><\/strong><\/p>\n Swaps are good if the user is in a hurry to get its funds, but are prone to slippage, front-running and need to monitor the price in real-time to get the target\u00a0price.Limit Orders are good for users with a plan, wanting to buy\/sell at a specific price, but the choice of the DEX where to setup the Limit Order is extremely important, as only Kromatika FELOs are able to fill the orders by relying only on the market and not on centralized authorities to manage the\u00a0order.<\/p>\n So, now that you know the importance of choosing wisely your Limit Order provider, take a look at Kromatika FELOs<\/a>, and try it today\u00a0!<\/p>\n To connect with an active Kromatika community, do consider joining our Discord<\/a>\u00a0channel.<\/p>\n Kromatika Links:<\/strong><\/p>\n Kromatika DAPP<\/a>Homepage<\/a>Medium<\/a>Twitter<\/a>Discord<\/a>Telegram<\/a>Reddit<\/a><\/p>\n Kromatika FELO protects users from Price Slippage<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":" Delegated Delayed Swap (Centralized Limit Order) vs Decentralized Limit Order: The Case for Kromatika FELO Kromatika FELO (Fees Earning Limit Order) is an iconic name for Kromatika\u2019s decentralized Limit Order because of its method of earning fees for users who place limit orders via Kromatika. Allow me to take you back to the beginning; The […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-14026","post","type-post","status-publish","format-standard","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/14026"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14026"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/14026\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14026"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14026"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14026"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}How does a Delegated Delayed Swap (Centralized Limit Order)\u00a0Work?<\/h4>\n
How does a Decentralized Limit Order work on Kromatika?<\/h4>\n
So finally, how are users PROTECTED from price slippage?<\/h4>\n