Словник

Settlement

Settlement refers to the process in which a user executes limit or market orders on an order-book-based DEX.

What Is a Settlement?

Settlement refers to the process in which a user executes limit or market orders on an order-book based DEX. The trade order is associated with a crypto wallet, and when the orders are processed, the funds or assets are transferred to that wallet while awaiting the trade to go through.

These trades have to be finalized via a settlement process and need to be given permission by users to add back the assets processed from the trade orders into the crypto wallet.

A proper UX and UI are essential for facilitating the settlement of funds from trade orders, especially for traders executing multiple orders in a short time frame. This ensures a seamless and smooth trading experience while maximizing the funds that are transferred back and available for subsequent trade orders for users at any given time. 
Unlike financial institutions or trading in TradFi with stocks, settlements in DEXs and DeFi do not require third-party intermediaries and are automated via code and smart contracts. The mechanisms used to settle orders can be done in a variety of ways, often via  AMMs, aggregators, order books, or a combination of those.
Other involved fees charged to users for settlement often include transaction fees for opening and closing limit or market orders, swap fees for using aggregators, or liquidity provider fees for using an AMM. While these are additional charges, they are often negligible compared to intermediary fees in TradFi, and very affordable and fast for blockchains with high transaction speeds and low gas fees like Solana and Avalanche, allowing users to execute small to high volume trades with any amount using flexible strategies. 

Author Bio: Hisham Khan, CEO of Aldrin

Hisham Khan comes from a decade-long background in managing and building robust and innovative financial and enterprise technology. With an extensive career at Bloomberg and based in New York, Hisham has worked as a project manager with some of the world’s top engineers. It was here where he discovered the transformative impact of cryptocurrencies, and has since left Bloomberg to build comprehensive and accessible trading tools through Aldrin. His core mission is to make advanced crypto trading and strategy development available for everyone.