Kromatika

In this short write up, you will discover the specifics of limit orders in the DeFi world and whether it truly is a decentralized feature or has a centralized database. You will also discover the basics of “FELO”. (To better convey its exclusive advantages, Kromatika Limit Order is now rebranded to FELO “Fees Earning Limit Orders”.)Kromatika has continued to build features keeping the users in mind. In fact, that is how Kromatika transformed from idea to protocol — to make DEX trading simple, profitable, and convenient, enabling users to transition from Web2 (CEX) to Web3 (DEX).As Kromatika evolves into a full fledged DAO, there are a lot of innovative features and exciting products being brought to the table, and we are proud to present to you the FELO “Fees Earning Limit Orders”, but first, some background on Limit Orders in the DeFi world.Why are Limit Orders Needed?In the traditional finance markets, we have two main types of orders: the market order and the limit order. A market order tends to execute buy/sell orders instantly at the current market price, whereas a limit order is used to buy/sell assets at a specific target price.Limit orders are largely utilized by traders who want to execute their trades at a desired price range without constantly having to monitor the market volatility. It is also a way to hedge risk &amp; ensure losses are minimized by capturing sale prices at specific levels. Usually limit orders mean you pay lower fees compared to spot market buys. Limit orders enable a user to execute a greater control over their entry or exit prices.The limit order feature is most commonly seen on CEXes (Centralized Exchanges).Challenges faced by DeFi platforms offering limit ordersIn DeFi, only a few DEXes have tried to propose Limit Orders to facilitate user experience. Even Uniswap being the most popular AMM DEX on DeFi don’t offer limit orders. Only the likes of Kromatika, 1Inch, Paraswap, and Sushiswap have this feature.But not all Limit Order Features are born equal.Their underlying workings can make a big difference to the end user :<ul><li>Is it really a Limit Order?</li></ul>On most DEXes, so-called Limit Orders are in fact “request for quote” — a method where the user (called the Maker) who wants to exchange some token creates an offer. This offer is published on the DEX’s centralized database, where another user (called the Taker) will decide to take it.Generally, the Taker will wait for an arbitrage opportunity before taking the order, leading to longer fill time.In summary, the majority of the DEXes use this approach for Limit Orders.Whereas on Kromatika, its Fees Earning Limit Orders are in fact “Single side Liquidity” added to UniswapV3 LP. As long as the token price goes to the limit order execution price, the price action will start to fill the order.<ul><li>Is it really decentralized?</li></ul>We’ve all witnessed some level of peculiar price action (also called long/short liquidation) on some CEXes. It can happen when one relies on a central authority to determine the price of an asset.This is why a lot of traders today prefer to switch to decentralized platforms to flee from those kinds of centralized manipulation methods. Knowing this problem they want to escape from, it would be a shame if they encountered the same issues on DEX platforms.But, it’s a lot of work to develop, and implement a fully decentralized Limit Order feature, and probably not the most profitable option for a DEX. Hence, it looks like it’s not a top priority for many DEXes.<ul><li>Is it efficient enough?</li></ul>Asset prices are volatile, and sometimes extremely volatile! When relying on a market maker to fill your order, one has to trust that the DEX will be reliable enough to manage your order in real time and that the Market Maker will fill 100% of the order at the desired price.As you can understand, depending on the DEX platform, a user may have to make a lot of compromises on its decentralization, efficiency, and “trustlessness’’ to use Limit Orders on DEXes.As this has been the case, we’re proud to say that “Kromatika” has taken the bull by the horn going the extra mile to make this limit order feature exceptional in the DeFi space.How does Kromatika accomplish this?Finally, you’ve made it here. Now, let me tell you a secret.Kromatika FELO leverages two of the most successful technologies in the DeFi space to propose a real decentralized, and reliable Limit Order feature:<ul><li>Uniswap V3 Concentrated Liquidity</li></ul>Kromatika FELO starts by adding liquidity on Uniswap V3 LP at the price range corresponding to the user’s target price, waiting for the price action to reach this range.<ul><li>Chainlink Keepers</li></ul>Kromatika developed a (very) Smart-Contract that utilizes Chainlink Keepers (a battle-proven network of decentralized workers) to monitor the asset’s price action in real-time. When the price reaches the user’s target price &amp; the order is filled, it allows Kromatika to remove liquidity at just the right time and the user enjoys a trade with zero price slippage.(There’s no price slippage as the user’s order adds liquidity which means the user is the liquidity provider for the limit order).So, Kromatika FELO keeps the entire limit order feature 100% decentralized and solves the issues discussed above on both CeFI &amp; DeFI.But that’s not all!!Read on to find out the next awesome aspect when using Kromatika FELO.The “Fees Earning” of Kromatika FELO: Users earn LP Fees with each trade (RealYield)How?Remember that Kromatika FELO works by adding liquidity to Uniswap V3 Liquidity Pool right?By the mechanism of Uniswap V3 LP, users earn fees when their source token is trading within their Concentrated Liquidity price range. Depending on price action and volume, FELO will earn more or fewer fees before the price reaches the user’s target price and the FELO is filled (at which point liquidity is removed automatically by the Chainlink Keepers).The average LP fees earned from a FELO represents 1.5% of the order size.Depending on the order size and the network (Eth Mainnet, Arbitrum, Optimism, Polygon), these LP fees tend to at least cover transaction fees for the limit order.And in some specific cases (slow price action, high volume / low liquidity, …) the fees earned can reach up to 10% of the limit order size!A schema of Kromatika FELO:<img src="https://miro.medium.com/v2/resize:fit:700/0*-X-_521ipVA1kzZ_" /><ul><li>The user creates a limit order on Kromatika</li><li>Kromatika adds LP to Uniswap V3</li><li>When the price enters the target range, LP begins to earn fees</li><li>When the price reaches the limit price &amp; order is 100% filled, Krom removes LP and collects fees</li><li>Users receive target token &#43; LP fees</li></ul>Now that we’ve described what a true decentralized Limit Order, let’s wrap it up :<ul><li>Limit orders are a strategic tool for organized traders.</li><li>Real Decentralized Limit Orders aren’t available on existing DEXes.</li><li>Kromatika FELO solves this by a trustlessness and reliable DEX Limit Order Feature.</li><li>Kromatika FELO adds more value to decentralized limit orders with the LP fees.</li></ul>Now what?Go ahead, make your first Fees Earning Limit Order on <a href="https://app.kromatika.finance/#/limitorder" rel="noopener noreferrer nofollow">Kromatika</a>, come and share with the community on <a href="https://discord.gg/Uv2Q2v26JG" rel="noopener noreferrer nofollow">Discord</a> and <a href="https://t.me/kromatika_finance" rel="noopener noreferrer nofollow">Telegram</a>, and take part in the future of Kromatika by participating in its DAO.

Fees Earning Limit Orders(FELO) — The Awakening

Kromatika Finance

在 2023年3月6日發表的其他文章

Map Reveal Boosts Doodles NFT Trading Activity

Introducing SHI30, NFT Token Standard on Shido Chain!

Security in Blockchain — The Landscape in 2023

Wrapping Up February: Launching 2023’s Roadmap, Partnerships & More!

We’re integrating $ENJ for stablecoin loans on March 8th!

EOS, STX, IMX and MKR Show Bullish Signs as Bitcoin Searches for Direction

訂閱免費電子報，每天收取加密貨幣最新動態！