Today, we’re introducing TheTrade, an innovative toolkit for decentralised trading and effective capital usage. TheTrade is developing a set of tools that boosts the capabilities and solves many of the issues related to Uniswap v3. In this article, we will explore how TheTrade enables users to have automated limit orders and how it innovates the DeFi space with a new specialist role of an Executor.

DEXes are good, but….

2022 is ending soon, but what a year it has been with regard to crypto. The very public blow-ups of various centralised entities led to a domino effect, causing each to fall one after another. It’s unfortunate that only when shit hits the fan do we know how important decentralisation is to us. It is only when the tide is low do we know who is really swimming naked all along. In this atmosphere of uncertainty, who can we really trust with our assets? Everyone knows that Decentralized Exchanges (DEXes) are the way to go, but let’s be honest. Most DEXes are not on par with Centralised Exchanges (CEXes) when it comes down to features.

One of the most important aspects of trading is to be able to execute at a price according to a trading plan, and this requires the use of a limit order that guarantees the trading price but not the execution of the trading order. This is in stark contrast to the market order found commonly in older DEXes like Uniswap, which guarantees the execution of the trading order but not the trading price. In a CoinDesk article by Cam Thompson in May 2022, Uniswap Labs CEO Hayden Adams said that Uniswap has attained a 70% market share on Ethereum and is used by more than 83% of DeFi users. But does Uniswap allow users to place limit orders? What about margin trading? Just imagine how much more market share Uniswap can grab from its competitors if these features are present in the most popular DEX in the DeFi space.

It is with this background in mind that we think of how innovative TheTrade really is because we seem to have found a clever way to have automated limit orders available to Uniswap v3 users. We do so in such a highly efficient way that makes it impossible for a trading order to suffer from slippages and sandwich attacks. On top of that, TheTrade gets a 0% fee for a successful trade. Intrigued?

How a buy limit order works

It’s best to use an example to illustrate how a buy limit order works using TheTrade protocol with Uniswap v3.

Let’s meet Bob.

Let’s say that the current market price of 1 ETH on Uniswap is $1200 USDC. Bob has only $1000 USDC but wants to buy 1 ETH. Transacting directly using market order will result in him getting less than 1 ETH. Bob is smart and not in a great hurry, so he uses TheTrade to create a spot limit order by selecting the ETH/USDC pair and entering the amount of 1 ETH and the price of $1000 USDC.

TheTrade smart contract then calls the ETH/USDC liquidity pool in Uniswap so that it can place the $1000 USDC from Bob into the pool. This is actually a position in the Uniswap v3 concentrated liquidity in the smallest price range possible. Concentrated liquidity is introduced in Uniswap v3, enabling individual liquidity providers to have greater control over the price ranges that their capital is allocated on the curve.

Now Bob will have to wait for the market price to go down in order for the order to be executed. For limit orders such as this, the price of the trading order is guaranteed but the execution of the order is not. When the price reaches the $1000 — $1000.01 bracket, the assets in the liquidity position are swapped and become available for execution of the order.

Introducing the Executor

Here is the part that gets interesting. In order for the limit order to be automated, a new role called the Executor is introduced in TheTrade. The role of an Executor is simply to execute the orders of users. In Bob’s case, the Executor calls on the execute( ) function so that the smart contract gets the 1 ETH from Uniswap, transfers it over to Bob’s wallet and closes the order. Since anyone with an Ethereum wallet (and enough ETH to pay for gas) can be an Executor, it decentralizes the whole operation elegantly. The designation of the Executor role not only allows automated limit order trading using Uniswap v3 liquidity pools, but also opens up another opportunity to earn money. But how?

Think about this. Why would an Executor carry out its designated role? Is it out of the kindness of its own heart? The answer? Incentives. Once the order is closed, the Executor gets an execution fee from the user for withdrawing liquidity and transferring the swapped assets back to the user. TheTrade does not charge a fee for each successful trade. This execution fee encourages the timely and automatic execution of limit orders. With the use of proper incentives to encourage the behaviour of actions that are needed by the protocol, everybody wins. The protocol moves up a notch towards decentralisation, the user frees up his time so that he doesn’t have to stare at the screen while waiting for the price to hit his target, and the Executor gets paid for the role it plays.

A breath of fresh air

We quite like the idea and found this to be quite innovative. It’s like a breath of fresh air to see something new in the space because innovation has been sorely lacking since the golden age of DeFi summer. Everything is like just a copy of a copy of a copy these days — bland and unoriginal.

If you want to find out more about TheTrade, check out their litepaper on the official website. Join our Discord and Telegram, follow us on Twitter and watch out for them. TheTrade will be launching its beta version of the app very very soon, so stay tuned!

The DEX market and DeFi trading keeps innovating, and Uniswap is leading by example. The weekly volume on September 2022 reached 10 billion, and over 70% of the amount was made through Uniswap.

Uniswap v3 average daily trading volume is 1 billion, over 70% of the DEX market, and has more than 80,000 unique users per week. But can this extraordinary display of strength bring more benefits to the users?

TheTrade brings a suit of tools to enhance decentralized trading and effective capital usage. Their mission is to provide a broader horizon of opportunity for uniswap_v3 liquidity providers, helping LP providers to expand the possibilities of trading operations.

TheTrade wants to simplify the trading functionality and to reduce the hustle for the user. The outcome is achieved by implementing automated solutions, and new ways to use Uniswap v3 liquidity pools

All previous solutions were using third parties or requested data from external sources, such as bots that had their share of profit. TheTrade added new concepts and created a synergy between the community and the traders.

TheTrade will introduce 2 new roles in DeFi — executors and liquidators — that will create true decentralization in automation solutions.

Every user on TheTrade can become an Executor, doing the job either manually or creating a bot to execute limit orders and earn commission.

The Liquidator is a community member that will be responsible for long and short positions liquidation.

The executor role was created for the users convenience, as the process can be ended either manually or with the bot assistance. Liquidators on TheTrade are responsible for long and short positions liquidation. Protocol users can take the role and receive a commission for helping the protocol upholds precise timings on all leveraged positions.

TheTrade huge liquidity pool will allow the protocol to prevent any supply issues and offer an enhanced trading experience. The protocol’s cashflow from Uniswap V3 stays within the community, upgrading the decentralization and users participation.

TheTrade solved the common issues that DeFi traders faced in their crypto journey, such as limit order, limited user functionality, constant transfer of liquidity, or slippage.

The integration of automated limit orders solved time wasting and slippage issues, and the Uniswap V3 smart contracts added an extra layer of efficiency.

pvmihalache.wallet on Twitter: "DeFi Research: @TheTradeOrg and The Innovative Toolkit for Trading! The #DEX market and #DeFi trading keeps innovating, and @Uniswap is leading by example. The weekly volume on September 2022 reached 10 billion, and over 70% of the amount was made through Uniswap.(✍️1/12🧵) pic.twitter.com/Ug56GYqzeD / Twitter"

DeFi Research: @TheTradeOrg and The Innovative Toolkit for Trading! The #DEX market and #DeFi trading keeps innovating, and @Uniswap is leading by example. The weekly volume on September 2022 reached 10 billion, and over 70% of the amount was made through Uniswap.(✍️1/12🧵) pic.twitter.com/Ug56GYqzeD

Benefits of using The Trade:

• Users have a full set of tools on one platform
• All users have fee for limit orders usage
• Uniswap v3 Isolated Liquidity implementation
• Boosted APY with leverage farming

Margin Trading always had a top spot in user’s preferences and TheTrade focus on customer satisfaction is highlighted by the tools available on the DApp. Users can carry out all Margin Trading operations in one place.

Smart Leverage Farming is the tool used to increase the efficiency of capital by providing leverage to the users, maximizing the income up to five times. The tool solves bear market problems, as the tool will automatically change the price range in which the users have provided liquidity if the market price moves beyond it.

Spot Limit Orders and Margin Trading on TheTrade will provide additional incentive by reducing the protocol fees of order creation and execution.

The Lightpaper highlights benefits for Uniswap V3, the Uniswap community and every other user. TheTrade was created for every trader, not only Uniswap v3 users.

TheTrade functionality includes the mechanics of swapping on Uniswap v3, keeping the focus on user’s profit. This vision is backed by the RoadMap, with the Polygon launch planned for the second quarter of 2023. Mainnet Aurora and Optimism to follow, along with further development and new farms.

Useful Links:

The Trade Website

The Trade — Lightpaper

The Trade Twitter

Should you be considering shifting to purely decentralized trading?

TLDR: we think you should go decentralized and let’s unpack why.

The benefits of decentralized trading

No KYC (Know Your Customer)

This means no signup required. If you have a crypto wallet you can trade without needing to fill out pesky sign up forms which for some may mean a higher potential to be judged by your residence, income, experience or many other background analysis often required before you are able to trade and before you have any access to using margin for leverage. Many underestimate the challenges one can face in just getting through the hurdles centralized exchanges have in place. Decentralized trading offers a level of privacy as no data is shared with a third party.

Safety

Centralized exchanges are often primary targets for hacking and malicious activity. Just recently in October 2022, Binance, the worlds leading cryptocurrency centralized exchange experienced a hack to the size of 100 million USD. It could have been over 500 million if not for swift defense. The decentralized aspect of decentralized exchanges, means data is dispersed over multiple servers and not in hackable central locations. Safety concerns also blend into the next point that decentralized exchanges don’t shut down.

No shutting down

In recent times we have seen exchanges such as FTX pause withdrawals, exactly at the time where you would be wanting to withdraw. The key benefit to decentralized trading is that it is free from an overarching party choosing what to do with your assets. You have the power and freedom of choice.

Range of cryptocurrencies

No need to wait for an exchange to list the crypto you want to trade, the range of asset options available for decentralized trading are vast.

These are some benefits of decentralized trading, what are some of the downsides?

Downsides to Decentralized Trading

It’s challenging to find a seamless experience that makes it easy to trade between assets. Centralized exchanges make these activities smooth and easy and there is not many options in the decentralized world to compete with that ease and fluidity.
Due to various reasons like, volatility, less liquidity, congestion in blockchains, there are risks that your trades may not get filled, transaction failures and slippage, meaning you get a much worse deal than you hoped for.

There are solutions to these downsides coming about. One such solution is ‘The Trade” based on the largest decentralized exchange Uniswap.

Decentralized Solution

The Trade is a unique answer to the challenges of decentralized trading. It’s built upon the highly liquid Uniswap to expand the features of the platform through limit orders and a margin trading protocol. It also enables leverage farming to further amplify your returns.

Some of the benefits of The Trade are that you don’t need to wait around for your desired price to trade, you can setup a limit order that is automatically transacted when the asset reaches your desired price. This is a big win for users to save time managing their trading, as a user can establish both automated buy and sell orders, as well as ‘take profit’ and ‘stop loss’.
In the world of centralized trading, it is often hard or impossible to get leverage without jumping through hoops or it’s just not offered. Using ‘The Trade’ they offer up to 5x leverage and because it is all decentralized that is immediately available to those using the protocol with no paperwork needed of course.

The Trade is about to launch their app very soon and there is a lot to be excited about when you look at their 2023 roadmap.

To keep up to date make sure you follow along in our discord and twitter, as well as keep an eye on our site: thetrade.org

Problems Of Slippage And Sandwich Attacks On Dex

Thanks to DeFi, and especially the decentralized exchanges (DEX), it is possible to order transactions such that an extra profit is guaranteed, via something known as the sandwich attack. It is worth noting that sandwich attackers are only able to make a profit if the amount of transactions is large enough, since transaction costs can be quite high on the Ethereum network. Despite the low size of profit, it is possible to repeatedly execute this kind of attack with no consequences. Sandwich attacks impact how much cryptocurrency an initial user receives.

Sandwich attackers would pre-emptively execute a victim’s trade using the same exchange (swap his USDC for ETH) and then drive up the price of ETH. In a nutshell, an attacker will attempt to sandwich a user’s transaction between two transactions, one before the other, and thereby incurring losses to the user. The easiest is user-level mitigation, which is the separation of one large transaction into several smaller ones, that may be less (profitably) able to be sandwiched. While its primary purpose is to break very big orders to minimize their impact on prices and to decrease slippage, an execution engine could be used to mitigate sandwiches.

Sandwich attacks are commonplace in the wild because of the public nature of blockchains, where any transactions can be observed (unless someone has a specific, direct connection to the mining pool). This results in a single miner/node, or a pool, scanning the mempool looking for pending large DEX transactions that may be forced to experience stumbling via the sandwich attack. A front-running attack exploits users that have submitted a transaction, but are still waiting to have it included in the Ethereum blockchain.

Attackers anticipate that transactions sent to a mempool will be included in the blockchain, and respond beforehand, earning profit if specific conditions are met. An attacker sees a large pending order from one victim, a prey, and decides to pre-emptively back-track on it to make profit. The Front-Run Bot (the attacker) looks for victims scanning transactions on a mempool, in this way, the attacker is able to leap in front of a trade.

The attacker needs to verify the maximum number of tokens an attacker could purchase in order to bid up the price, making sure that the price change is not greater than the creep factor, which is a bot that scans trading transactions. To protect users from buying a token at an undesirable price, slackage for every trade can be defined. Price slippage can be defined as a change in an asset’s price over the course of the trade.

Purchases raise the price of the other cryptocurrency-asset Y for a transaction by a victim, and increases the slippage (the expected increase or decrease in price depending on the amount to be traded and available liquidity). Because of the purchase, the price of the other crypto-asset Y increases, A victim purchases at the higher price of the asset Y, and then A bot sells it back at the higher price.

The higher slippage is per transaction, the higher subjective transactions are for a Frontrunne Attack. This means users who wish to purchase tokens cannot know exactly what price they are getting when their transactions are executed. In the sandwich attack, a user, perhaps more clever and knowledgeable about DeFi, preempts and then overrides the transactions of the other user. The effect of this is the second user losing some of his funds.

As shown in the chart, the average gain is low, around 0.15ETH, but there are significant opportunities to take advantage of the sandwich attack each month, which can result in the accumulation of substantial gains. With the average ROI being over 4%, this attack can be considered a great investment strategy in the cryptocurrency world because of the low risks involved (especially dealing with miners directly) and quite reasonable returns. The sandwich attack is applied on transactions sent to the DEX (decentralized exchange) for buying tokens.

A look at how maximum extractable value (MEV) seekers are able to profit from sandwich attacks, and how to avoid them on future transactions. Bots seek out transactions that have a lower gasprice, as well as liquidity pool transactions, in which users may be claiming rewards, and converting these into required tokens. Most of these attacks are performed via automated market making solutions, or AMMs.

The vast majority of MEV events are associated with Uniswap V2 and Uniswap V3, where miners usually employ Sandwich attacks to siphon profits off high-volume traders, but other platforms such as Compound and Aave are affected by Liquidation Front-Runners as well:where a Liquidator can find and execute Liquidation transactions using Front-Runners, guaranteeing a Liquidator Fees (or collateral discounts).

To add insult to injury, MEV remains a huge issue in the DEX ecosystem, as over $750M has been mined in the Ethereum network — much of it attributed to arbitrage transactions. Little has been done to fix persistent issues plaguing the DEX ecosystem, including failed transactions, front-running, and mining exhaustible value (MEV). DeFi is early years, and a poor reputation from attacks would hinder its growth.

Users Problems Such As Slippage And Sandwich Attacks On Uniswap V3

With Uniswaps pricing algorithms, liquidity is always highly demanded, with transactions being executed constantly. Users who freeze the liquidity of their coins are locked out, leaving them fully exposed to the drop in prices.

Given the APRs of trading fees can be lowered, particularly on the new AMM, DEX relies on offering its own governance tokens as incentives, which requires higher valuations of prices in order to attract and keep liquidity providers. Because decentralized exchanges have no single person or entity in charge, users are encouraged to offer liquidity via liquidity pools, in exchange for receiving a share of the trading fees.

This week alone, popular Ethereum-based DEX users are still suffering over 100,000 failed transactions, which highlights just how serious the issue is. Uniswap, recently announced that it has reduced its platform’s failure rate of 11% down to 6%. Little has been done to tackle persistent issues plaguing the DEX ecosystem, including failed transactions, front-running, and mining extracted value (MEV).

The victim’s pending transaction will be sandwiched between two new transaction orders created by the bad actor. These two transactions are pre- and post-transaction to a user (hence the sandwiched designation), creating loss to a user as side and gain to an attacker’s side. In the other, the attacker restores liquidity and price to the pool.

This sequence causes ETHs price to rise, which allows the evil merchant to profit from the back-and-forth trading by creating artificially high prices. As the attacker successfully fills the order for the desired price, the next trade is higher value. A simple example of this might be the evil merchant buying the very assets that a user is exchanging for — say, using LINK for an exchange for ETH — knowing the ETH price is going up. Then, the nefarious trader would purchase the ETH for a lower price to allow the victim to purchase it at a higher cost.

The costs of performing these transactions in order to preemptively and later on outbid other traders often exceeds the financial gains to attackers — particularly with Ethereum network, which records transaction costs (per activity) fairly regularly. In a sandwich attack, a user, perhaps more clever and DeFi-savvy, will front-run and back-run transactions from another user. The effect of this is the second user losing some of his or her funds. MEV mining may also harm the user due to higher slippage from sandwich attacks, or higher network fees caused by gas wars between bots fighting for inclusion into the next block. Until decentralized exchange platforms implement smart contracts to prevent these attacks, DeFi users will need to accept the risk of having their transactions in a decentralized exchange sandwiched.

The sandwiching impacts how much ETH a user receives. By default, Uniswap V3 sets slippage tolerance at 0.1%, meaning that the swap is executed only when the price is less than 99.9% of what the user saw on their browser when it was executed.

TheTrade will use different order types to make your trading more efficient, our tools will protect you from slippage using Uniswap v3 liquidity. We are developing safe innovative solution of algorithms that will bring new protection mechanism in your trading process.

Join the waitlist — thetrade.org

General

Uniswap is a decentralized exchange which can be used for trading ERC-20 coins and earning rewards via liquidity pools. Unlike most exchanges, which pair buyers and sellers to set prices and make transactions, Uniswap uses a simple mathematical equation and pools of tokens and ETH to accomplish the same task. UniSwap V3 introduced a new concept with multiple pools for every pair of tokens, with different swap fees for each.

UniSwap V3 allows liquidity providers (LPs) to focus their capital in smaller price ranges. Also, it introduces concentrated liquidity, which allows LPS to distribute their capital on a defined range of prices. Concentrated liquidity allows the market to determine the reasonable allocation of liquidity, while still allowing LPs to build up as many positions in their price ranges as they deem appropriate. Uniswap v3 overturns this model by using concentrated liquidity, making the positions of an LP non-fungible.

Users looking for a simple, no-frills DEX for trading their ERC-20 tokens on any of 4 supported blockchains might find Uniswap to be a great match. Users may also buy the Uniswapas governance token, UNI, on the platform. The use of wrapped ether (WETH) allows users in UniSwap V2 to combine any ERC20 token directly with another ERC20 token, without first having to convert them back into ether.

Flash Swaps in UniSwap V2 allows users to pull in any number of ERC20 tokens without an up-front fee. These flash swaps let users withdraw any amount they wish from Uniswap with no upfront costs, and do whatever they wish with it (execute arbitrary code), provided it is done at the end of transaction execution.

Uniswap v1 supported only Ethereum swap pairs, so it was possible to only swap ETH for an individual ERC20 token. UniSwap is a protocol that allows traders to trade ERC20 Ethereum tokens without using the order book. While you can wrap cryptocurrency such as Bitcoin (wBTC) and exchange them through UniSwap, at the moment, no other protocols are supported through the UniSwap marketplace. Even Uniswap V3, the notable leader of the DEX niche, does not have limited orders, meaning users can only execute transactions according to the price being offered at that moment.

UniSwap Success On The Dex Market

The next-generation UniSwap v3 brings in much-needed muscle, from an AMM feature perspective, to capital efficiency, fees, and pricing oracles, and it is going to go a long way towards helping this popular and prominent exchange regain its crown as the apex DEX of the world.

UniSwap v3 is a new iteration of the Uniswap protocol, offering a DEX powered by AMM, promising better capital efficiency for users and greater capital control for liquidity providers. Next up is Uniswap V1, the first iteration of the Uniswap protocol, which is designed to offer a functional DEX on top of Ethereum via liquidity pools and an AMM.

UniSwap provided the DEX with the much-needed push, being the first automatic market maker that solved the high liquidity issue on a decentralized basis. Uniswap v2 introduced ERC20-ERC20 liquidity pools to address this alleged problem of Ethereum bridge. Uniswap addresses the issue of relieving by automated liquidity provisioning using Automated Market Makers (AMMs).

If one wants to make money from providing liquidity for the exchange, users have this capability in Uniswap V3 by offering their coins in the liquidity pools.

In version 2 protocol, users that provided liquidity to those pools were given a set amount of kickbacks per transaction that occurred within that pool, as a reward for taking on any risks associated with providing this liquidity. Users that wish to earn through the liquidity pools have the ability to do so through Uniswap, provided they wish to earn through a particular pool option offered by Uniswap.

UniSwap v2 also introduces new features enabling highly decentralized, and highly manipulated, feeds to on-chain prices. Uniswap also introduced a protocol fee (which can be turned on/off by decentralized community voting) which sends 0.5% of each 0.30% transaction fee into the Uniswap Fund for funding future developments. This new feature, which focuses liquidity into one configurable price, would greatly improve the market depth, thus decreasing the friction to users on Uniswap v3.

In addition to these additions, Uniswap v3 will no longer automatically reinvestigate transaction fees to the liquidity providers. If new features lure back liquidity providers who migrated to other AMMs, Uniswap would set itself up for renewed domination of the DeFi space. If liquidity providers gravitate to Uniswap V3, traders would mostly be in for a treat, since it may mean better liquidity and fees for their trading. Once Uniswap V3 launches, there will be a portal to migrate liquidity providers to V2 providers, too.

Gas fees will also be significantly lower on Uniswap v3 than on v2, thanks to Optimism, an Ethereum-based, layer-two solution that will deploy to Uniswap soon after the launch of v3. Even with some substantial improvements introduced by the Uniswap team on Uniswap v3, the team claims that the mainnet gas fees will be a bit lower than on v2. This is the biggest advantage to using the Uniswap V3 over the v2 protocol, as it allows multiple fee levels on its liquidity pools.

Because LPSs can offer liquidity at customized pricing ranges, their liquidity positions on Uniswap V3 are no longer interchangeable. In Uniswap v3, LPs are not simply placing their assets into liquidity pools and spreading them out equally across the price curve. For centralized liquidity to function, Uniswap has created ticks that are used to hold the liquidity in a certain price band. This way, users on TheTrade benefit from a combination of its latest version’s large liquidity and extra features.

The combination of these features improves the effectiveness of the AMM model supporting the DEX of Uniswap v3, which will be beneficial for traders due to more liquidity.

TheTrade is a project which will extend liquidity capabilities and functionality from the latest release, providing users with limited-limit spot orders and margin trading at the Beta release. Learn more: thetrade.org

General

Limit orders, typically a function provided by centralized exchanges, help traders to efficiently monitor prices they are trading assets for. Limit orders enable traders to establish trades of tokens, which are filled whenever market prices are aligned with desired prices. A limit order will enable DeFi traders to have their trades filled at desired prices, leaving instructions for the order to fill the buy or sell order at specific prices (or better prices).

Trading on DeFi is limited to hand-offs, a drawback when compared with centralized exchanges which let you place buy and sell orders. DeFi traders trade manually as well, often, whereas normal traders automate their trades using robots, usually setting up orders beforehand and having them filled — as most centralized platforms allow limit orders, including stop loss functions.

Trading on DEX

In terms of order types, most of the AMM DEXes offer market orders only, and they generally do not ship with other common order types such as limit orders, stop losses, buy-stop orders. AMM DEXs are by far the most popular and used DApps, offering spot trading at higher aggregate volumes compared to limited-order DEXs. Modern DEXs operate with automated market makers (AMM) protocols, eliminating order books and providing liquidity through pools of traded pairs.

This transferring is done via the use of smart contracts, and prices are determined according to the DEX type, for example, an Automated Market Maker (AMM) DEX, or an Order Book DEX. Whereas, on centralized exchanges (CEXs), like Coinbase or Binance, a platform facilitates trades using a centralized exchange’s internal matching engines (CEXs), DEXs perform trades via smart contracts and transactions over a blockchain. Thanks to DEXs, individuals can now buy or sell cryptos with one another, no need for a middleman, and the smart contracts will automatically execute their orders for their desired prices and amounts.

In addition to that, users are also able to place limit orders directly in the trading platform’s user interface, creating extra liquidity from the makers of orders.

There is a major drawback of AMMs: slippage, or the difference in prices between the trader’s entry into a market and their executed price order. AMM traders are highly likely to get orders executed, but rarely guaranteed precise amounts traded because price exposures can be large. In this example, the swapper may send the opposite order to a compatible order with the prices reserved by the four traders, i.e.

How it works in general?

The matcher observes this and calls a smart contract to match two orders, claiming a fee (0.001+0.002 WETH) allocated to the orders, and clearing trades at a price of their choosing. In a nutshell, the highest bid and lowest ask are converging to represent the current market price, and users have the ability to traverse this bid-ask spread to immediately execute an order. Once an order is executed, the PMM sells 1000ETH on a different chain’s DEX for a profit, and DEX benefits from the liquidity brought in by PMM.

Decentralized exchanges do not require limited orders in order to function, since liquidity flows to the general pool instead of being allocated at the individual price levels. While older generations of decentralized exchanges were limited by the issue of liquidity, the newest generations of exchanges, called AMMS, address this problem via pools of liquidity. In turn, limited orders are intended for more sophisticated traders, as it requires analysis of market situations and estimation of the likelihood that the asset price will hit a certain level.

Advantaged of Limit Orders

Limit orders on the futures market allow traders to have full control of the price at which their orders are executed.

A buy limit order guarantees that the buyer won’t pay less than anticipated. Buy limit orders give traders and investors a way to enter a position accurately.

Limit orders are advantageous because they allow investors to have greater control over the price they enter and exit the transaction, making this kind of order execution a more disciplined approach from a money management perspective. A limit order may be advantageous in scenarios in which the security or other assets are traded lightly.

A limit order always allows for precision in placing an order, and is suitable for traders where getting a particular price is more important than getting a transaction filled by market prices. For instance, with sell orders, it would be executed only if the price is either on a limit or above.

TheTrade features for limit orders

To use a limit order, the user must constantly monitor the transfer of liquidity from asset to asset. TheTrade will introduce automated limit orders, the advantages of which are Uniswap v3 greater liquidity, full automation, no slippage, and rewards for order creation. We will create new environment for trading on DEX.

You will have a set of tools that solve the problem in a one handy place.

Main benefits we can grant for you:

• huge Uniswap v3 liquidity
• no slippage
• no sandwich attacks
• automated solutions

Learn more about Limit Orders with TheTrade

General

Decentralized Exchanges (DEXs) are cryptocurrency exchanges that function without the need for a central authority, allowing users to transact with each other peer-to-peer, while maintaining control over their funds. By definition, a decentralized exchange, or DEX, is an online platform connecting buyers and sellers of cryptocurrency, thereby enabling peer-to-peer (P2P) crypto transactions. Decentralized Exchanges (DEX) emerged as an alternative to the CEX platforms, offering P2P trading and exposure to the emerging decentralized finance (DeFi) industry. While crypto-to-crypto exchanges (CEXs) facilitate trading in digital assets built on a blockchain, the platforms themselves may be centralized or decentralized.

Unlike centralized exchanges (CEXs), decentralized platforms are not custody-based, meaning that a user remains in control of his/her private keys while trading on the DEX platform. In contrast, decentralized cryptocurrency exchanges are the kind of exchanges that are neither operated by one central party nor has one point of entry. Essentially, a decentralized crypto exchange is kind of like a peer-to-peer network, with lots of points of contact. Centralized crypto exchanges may be susceptible to attacks, and they have less degree of privacy.Uniswap

Uniswap is basically a tool used for quick and easy trading of cryptocurrencies, with no intermediary and no third-party sources. As a decentralized exchange, Uniswap operates off of the crypto funds of its users through liquidity pools, which are pools that hold two cryptos.

Uniswap, being a decentralized entity, has no listing process, meaning anyone can list a coin on the exchange, provided that it provides a certain amount of liquidity to traders via the liquidity pools. Uniswap pools tokens in smart contracts, and users trade on those liquidity pools. Uniswap leverages liquidity pools to enable users to easily trade between any of hundreds of tokens. Uniswap allows users to swap tokens and ETH, trading on the asset pool held within the smart contract.

Uniswap offers hundreds of tokens, allowing users to freely exchange and trade tokens amongst themselves. The UNI token is the Uniswap governance token, holding one allows holders a voice in development. Although Uniswap is a DEX, the UNI token is available on centralized exchanges like eToro. Built on Ethereum’s Blockchain, this exchange platform’s native token has the same name, Uniswap, with a ticker symbol UNI.

Intuitively, Uniswap uses Exchange contracts to combine both Ether and the designated ERC-20 token. Unlike centralized stakes, where centralized exchanges rely upon the centralization of decision-making about the tokens prices, Uniswap operates in pools of liquidity. Uniswaps smart contracts maintain liquidity reserves in a variety of tokens, and transactions are executed directly on those reserves. With Uniswap, investors can earn UNI tokens by merely providing them to a pool of liquidity supporting a DEX.

Users can also earn rewards by providing liquidity into the liquidity pool for the Uniswap tokens (UNI). Uniswap users can join as liquidity providers and earn rewards on trade fees. With Uniswap, users can trade cryptocurrency tokens without having to rely on a middleman.

When we talk about trading on Uniswap, we can think of Uniswap as a self-executing liquidity protocol. Since it relies on users for providing liquidity, it needs to incentivize users to deposit funds into its pools. Uniswap is one of the largest decentralized exchanges by Total Value Locks (TVLs) — the number of cryptocurrency funds in the liquidity pools.

As an open-source protocol, Uniswap (UNI) allows developers of DeFi applications to start new, productive applications, which allows users to exchange their crypto coins for an extremely low price. Since a lot of crypto tokens are created using Ethereum, there are a pretty wide variety of types of cryptocurrencies that can be traded on Uniswap.

Advantages Of The Decentralized Exchange

Clients of decentralized cryptocurrency exchanges have access to a limited number of order types and do not have access to margin trading (or similar services). Compared to centralized exchanges, decentralized exchanges attract less liquidity as it is quite difficult for many users to trade on DEXs, which are relatively new and in some ways overly complex. Unlike centralized exchanges (CEXs), decentralized platforms are noncustodial, which means that the user retains control over their private keys when making transactions on the DEX platform.

This means that instead of having one party responsible for all data and information, decentralization takes place on a peer-to-peer basis. In short, there is no need to trust or fear a platform that enables decentralized peer-to-peer transactions, since no centralized entity controls your funds. One of the most obvious benefits of a decentralized exchange is the elimination of intermediaries and the execution of peer-to-peer transactions without a central authority. Peer-to-peer transactions can take place with almost complete anonymity without going through the know-your-customer (KYC) process that centralized companies require from users, meaning that almost anyone can transfer funds for any reason.

Unlike centralized exchanges, DEXs don’t necessarily require users to go through a know-your-customer (KYC) process, which means you don’t deliver your documents to any organization, so if that organization gets hacked, it may be available to others people provide access. However, KYC documents are also important in the financial system, as they allow governments and authorities to control the flow of funds.

DEX users can easily and securely log into the DEX without having to create an account on the exchange, authenticate or provide personal information. While DEXs continue to evolve and interact with other DApps, DEXs typically run on the same blockchain. One thing all decentralized exchanges have in common is that they use smart contracts to execute on-chain orders and never protect user funds.

Advantages Of Uniswap

Uniswap uses smart contracts, which can also prevent liquidity issues which have traditionally plagued centralized exchanges. Uniswap has eliminated the traditional order-book model and introduced the Automated Market Maker (AMM) protocol, which allows users to transact using smart contracts called a liquidity pool. Trades executed on the platform are secured with its smart trade contracts, which are decentralized wonders, allowing users to transact whenever they want, with no central authority needed. The Uniswap platform can support trading in any digital token which conforms to Ethereum technical standard known as ERC-20.

Anyone can trade tokens, add tokens to the pool for fees, or list the token on Uniswap. Investors also have the ability to choose to trade Uniswap tokens on an exchange and treat them as a speculative investment instrument. Anyone selecting to do so could trade the digital assets using Uniswap, providing liquidity, or creating a new market for trading the new pair of digital assets. Investors using Uniswap can exchange their cryptocurrencies straight from their Ethereum wallet, so Uniswap does not have any custody over their funds.

Going forward, users will also be able to earn Uni coins by placing coins into the liquidity pools of Uniswap. UNI tokens are used for voting on protocol upgrades, while investors are able to staking their UNI tokens in the liquidity pools to receive interest on their investments. Uniswap has developed a protocol which relies on liquidity providers creating liquidity pools, which then supply liquidity throughout the platform, allowing users to trade between basically any ERC-20 token without having to book orders. Unlike Binance Coin (BNB), Ether (ETH), Cardano (ADA), Tronix (TRX), and EOS.IO (EOS), which can all be used as transactional currencies, in addition to providing the power to its issued blockchain networks, Uniswap allows sellers and buyers to trade ERC-20 tokens permissionlessly and without trust.

General

Decentralized exchanges, also known as DEX, are peer-to-peer markets in which crypto traders execute transactions directly, without having their funds managed by a middleman or a custodian.

The idea of ​​a decentralized exchange is nothing new, we saw the Ethereum-based DEX wave hit the crypto shores in 2018. Recently, there have been days when the volume of cryptocurrency exchanges through decentralized exchanges (DEX) exceeded the volume of large centralized exchanges.

Decentralized crypto exchanges differ from centralized cryptocurrency exchanges by allowing users to maintain control over their assets by running their essential operations on a blockchain.

How are DEXs regulated?

While crypto exchanges (CEXs) facilitate trading in digital assets built on top of a blockchain, the platforms themselves may be centralized or decentralized.

Decentralized crypto exchanges differ from centralized cryptocurrency exchanges by allowing users to maintain control over their assets by running their essential operations on a blockchain.

Unlike centralized exchanges (CEXs), decentralized platforms are not custody-based, meaning the user remains in control of his or her private keys while trading on the DEX platform. Since wallets are merely connected, rather than stored, in decentralized exchanges, only the user is ever able to access his or her crypto, with a DEX simply being the interface that allows funds to move.

Because decentralization is the core aspect of trading in cryptocurrencies, the demand is for transactions that do not involve third-party costs or manipulation, and for exchanges without centralized points of authority, welcoming decentralized exchanges (DEXs).

Regulators in Europe, the US, and elsewhere are busy working out the details of how to designate decentralized exchanges (DEXs) as “brokers” transaction agents, or similar entities that influence the transfer and cooperate with each other. The use of decentralized exchanges (“DEXs”) to conduct cryptocurrency trading has skyrocketed this year. Recently, there have been days when the volume of cryptocurrency exchanges through decentralized exchanges (DEX) exceeded the volume of large centralized exchanges.

If a DEX meets the Securities Act’s definition of an “exchange,” it would still be subject to regulatory compliance despite its “decentralized” nature. In theory, DEX platforms that only facilitate the trading of non-security tokens such as Bitcoin would not be subject to the BSA or securities laws. Nonetheless, if the tokens are securities, they cannot be legally traded on some exchanges, such as registered national security exchanges or alternative trading systems.

While DEXs are currently not subject to KYC/AML regulations, many think they will eventually be as cryptocurrency exchanges are now regulated. Regulators can change course dramatically by redefining DEXs so that they are subject to KYC and AML rules, as is the case with cryptocurrency exchanges.

Popular exchanges are increasingly under the scrutiny of regulators such as the Securities and Exchange Commission (SEC), who are looking for compliance, transparency, and other hot topics in investor relations.

Can Decentralized Exchanges Be Exempted From Regulations?

Decentralized Exchanges are software protocols using Blockchain technology, in particular Smart Contracts, to trade DeFi Tokens among entities. DEX protocols can be used to exchange tokens representing whatever people wish to trade, from commodities and derivatives, to artwork, and even socks. DEX provides a way for people who cannot participate in the centralized financial system to trade assets just like they would cash.

Decentralized exchanges therefore do not have to maintain a money-honeypot that could draw in criminals, like centralized exchanges, nor could they themselves steal funds. Users, thus, cannot hold any cryptos in a decentralized exchange.

An Exchange is known as a market that supports trading in derivatives, commodities, securities, and other financial instruments. In general, an exchange is accessed via a digital platform, or occasionally at a physical address, where investors are organized to trade. While cryptocurrency exchanges (CEXs) facilitate trading in digital assets that are built upon a blockchain, the platforms themselves may be centralized or decentralized.

If you design or implement a decentralized exchange tool, and if some tokens traded using this tool are securities, you could be held liable for facilitating or operating an unregistered securities exchange.

Two additional implications of the token being a security are requiring that an individual be a licensed broker-dealer with the SEC and a member of the Financial Industry Regulatory Authority (FINRA) in order to facilitate a securities sale or act as a market maker or otherwise be a dealer in an asset, and the asset can be traded on only licensed securities exchanges or alternative trading systems approved by the SEC.

Developers and operators of digital asset trading platforms, or of smart contracts on which digital asset trading platforms are built, might want to think again about whether their activities expose them to Section 5, and whether they should seek registration as National Securities Exchanges — or, more practically, exempted Alternative Trading Systems under Regulation ATS.

There is also a proposed regulatory framework, set out by the Financial Services and Tenders Bureau (FSTB), that would require anyone operating a virtual asset exchange, even if that exchange does not offer any securities, to receive a Virtual Asset Service Provider License from the SFC.

Even if the SEC acknowledges that DEX is not a securities exchange, the SEC could still apply securities regulations to DEX if individuals create tokens representing securities and use DEX protocols to exchange them.

Margin trading is a well-known tool in traditional finance. Here, the margin is the collateral that a trader has to deposit. This covers credit risks it represents towards the broker or the exchange.

Margin trading is an instrument that came into use almost 100 years ago. However, it has undergone many changes since it appeared on DEXs.

A historical background

DEX’s popularity skyrocketed when Uniswap appeared on stage. With the new AMM tech, it became possible to provide liquidity in a market by automatically buying and selling assets using the established list of rules.

AMMs help sellers and users trade imposingly, as they know they can always find counterparties for their trades.

The new technology also resulted in the implementation of new instruments, such as margin trading. As more and more users realize that CEXes are vulnerable to hacks, DEXes margin trading became more popular. Moreover, traders strived to control their funds and don’t keep them on centralized servers.

So DEX + margin trading was the logical next best thing to be created in the trading ecosystem. As an answer to the centralized margin trading intervention of Binance, FTX, and other CEXes, decentralized solutions appeared on dYdx that became the first well-produced decentralized crypto derivatives exchange. However, TheTrade managed to improve this instrument. But first things first.

CEX vs DEX margin trading

In traditional CEX margin trading, you need to transfer your assets to the exchange wallet before starting to trade. The exchange plays the role of storage, keeping your funds on the server. Thus, you are controlled by the centralized system and people you never saw. You are no longer managing your funds.

Moreover, complex personal verification (KYC) and high fees also turned away a lot of users.

On decentralized exchanges, the scheme is different. Here you are free from centralized intervention. A broker in DeFi turns into one of the autonomous money markets. And the central part plays His Majesty, the smart contract. As for the security factor, it is pretty doubtful. On one hand, DEX security is provided by a group of validators, and many human mistakes may occur. Still, you’re free to keep your funds safe and don’t transfer them to the platform. But traditional DEX is famous for sandwich attacks and slippage risks.

CEX is more vulnerable to hacks, data manipulation, and cyberattacks. So no matter what you choose, you do it at your own risk.

Margin trading specifics

Briefly, you can trade more than you have in your wallet. For instance, you ask for more and trade 15X the value of your asset.

Of course, there are definite risks. You can lose more but also earn a lot more in such cases. Even though margin trading is the favorite tool of more experienced traders, we’ve developed an easy-to-use scheme that can be adopted even by newbies. But first, let’s find out more about the two profitable margin trading schemes. We’ll also discuss how they work on TheTrade and differ from CEX.

Market margin order — market is the king

A market order is when you buy or sell at the market bid or offer price.

So here, the system dictates the rules. When dealing with market orders, there is no price protection. The deal may be closed at a price far lower/higher than the offer you placed.

If you want to make profits in the market by purchasing assets and hoping they’ll rise in value, you need to open a margin market order.

CEX margin market orders differ from DEX ones by the bigger leverage scale, as centralized platforms have more liquidity. However, the bigger your X will be, the more risky your trading is. Moreover, CEX market margin orders have more volatile fees, a changeable hourly rate, and more depending on the market trading volume.

Let’s dive into the opening of the market margin order position on TheTrade DEX and traditional CEX to find the main differences.

The market price determines the number of assets you get for this deal. It will be displayed in the window below. However, if the price drops or rises, you won’t be able to finish the deal.

Limit margin order — the winner takes it all

Many traders realized the necessity of narrowing price ranges to get more considerable earnings and more profound and detailed trading schemes.

However, here all the responsibility lies on you. As a trader, you monitor your deals and close loss-making orders quickly. But if you lose profit, no one will be to blame.

CEX fees here also differ from Dex ones. On CEX, your hourly interest rate is controlled by the total amount of borrowers + you pay the maker fee, which is different on various CEXes. However, the combination of the two makes the process more expensive than the same one on DEX.

Suppose you predict that the market is moving up; you connect your wallet to any DEX supporting margin trading and set a specific price that is necessarily lower than the current market price.

How TheTrade improves limit and market schemes in margin trading. Resume

What if all the margin trading processes happen quickly and safely?

Our team is happy to offer such an opportunity.

We developed a non-standard profitable margin trading solution based on other exchanges’ most successful earlier developments and added some spicy profitable components.

TheTrade market order margin trading

TheTrade limit order vs usual DEX limit order

1. Unlike other DEXs, TheTrade market order margin trading has 0% fee commissions.
2. The new Executor role provides more security and speed to transactions.
3. Using Uniswap isolated liquidity reduces slippage or sandwich attacks to zero.
4. High leverage. As soon as the DAO system is implemented and enough liquidity is transferred to our platform, we’ll be able to place any tokens and provide liquidity for up to X100 leverage.
5. Our liquidity pools and limit order mechanisms enable leveraging various asset pairs. Thus, you are free to deposit less and earn more than on traditional DEXs. That’s an excellent option for both experienced traders and new players.

TheTrade limit order margin trading

TheTrade market order vs usual DEX market order

1. New Liquidator role. Liquidator sends a request to TheTrade smart contracts to liquidate a user’s market margin order position. Usually, DEX market orders don’t have so much control over the deals.
2. The new Liquidator role provides more security and speed to transactions.
3. Using Uniswap isolated liquidity reduces slippage or sandwich attacks to zero.
4. High leverage market order margin trading starts from 5X and will constantly rise as the system develops.

Thanks to the new roles we created, the process is 100% automated and secure.

You’re free to choose your favorite scheme. Whether the market is volatile or stable, there is always a trading margin solution TheTrade can offer.

Conclusion

Both limit and market orders are remarkable in their way. If the market goes straight, it is better to use market orders; if it is volatile, the risk will be quite noble.

TheTrade offers breakthrough margin limit and market order instruments with transparent and easy-to-use schemes that will soon be developed as the DAO system is launched.

Check out our Lightpaper to learn more about our trading schemes and perspectives.

The game-changer solution with limitless opportunities

It’s always better to choose your fate. The financial system is not an exception. When new instruments and technologies appeared on the DEX stage, trading became more variable.

Limit orders considerably changed the game, saving lots of time and effort for traders all around the world.

Of course, limit orders imply deeper trading knowledge, but the DEX demand for this trading solution is huge. Dune analytics for September 2022 showcases that the general volume of limit order deals only on Ethereum is $31,022,292,319.

But why are limit orders so popular and what is the hype about?

What is a limit order?

Originally the limit order concept came from the traditional trading market.

Limit order here is a type of order where you can sell or purchase any asset at a specified price. Such deals guarantee that a trader will pay that price or less.

Thus, if you don’t want to depend on the current market price, and buy or sell by your rules, this type of order is a must for you.

How it all began

From the very beginning, DEXs ran solely on automated market maker (AMM) protocols. They work just like an order book exchange, but you don’t need any third parties to let your deal happen.

For sure, interaction with a smart contract that guarantees the execution of an order is a good thing. But when you are already a grown-up trader with settled strategies on the list you need something more.

When the time comes you pay attention to limit orders, as you make the rules here.

Because the guarantee of execution on AMM is cool, but the price guarantee is much better.

And actually, the demand for the DEX limit orders was obvious on social media long ago.

Unlimited benefits of limit orders

1. Minimum losses
   Now as there is an opportunity to choose the limit order scheme, you can be sure you won’t lose funds during the nighttime. Traders don’t have to worry about slippages and re-buy the asset at a higher price if something goes wrong. Your order is always executed at the price needed.
2. No stress
   Previously, traders spent days and nights on DEXes monitoring the price. This could be really nerve-racking. The constant switching between numerous decentralized platforms in order to find the best offer took a lot of time and nerves. Limit Order swaps your assets automatically. Thus, you can sleep well.
3. Higher profits
   You miss fewer opportunities = and you get more profit. Even if the price you desired appears just for a few seconds, the Limit Order contract immediately processes your order. So now traders can stop training their super reaction. Everything’s done automatically.
4. More free time
   In conclusion, a trader can spend more time creating and developing new trading theories than constantly staring at the monitor and trying to find the bluebird of happiness.

DEX issues with limit orders

SushiSwap and 1inch Limit Order Protocols became the pioneers of the sphere, and we give credit to them. However, there were some considerable issues in the limit order processes on the DEX platforms.

1. Not enough safety
Slippages and sandwich attacks are a usual thing for DEXes. Bots often execute sandwich attacks on 1inch and other DEXes swaps.

2. Lack of liquidity
There is not always enough liquidity to execute your order. So it all depends on market conditions. Some transactions may stay pending for days and months.

3. Decentralization issues
Actually, lots of decentralized platforms can’t be fully called decentralized due to their essence. Many of them process transactions on servers. That’s why hackers can easily steal funds. And the team can control all your operations.

How we solved the limit order issue on TheTrade

TheTrade team improved all the developments of other platforms in a way that allows us to tell it’s the best solution on the market now.

1. The increased liquidity
We’re utilizing Uniswap v3 which allows us to offer 2 to 4.5 times more liquidity on ETH/USD, ETH/BTC, and other ETH pairs than other platforms. This guarantees that your deal won’t be pending for years waiting for enough funds to come.

2. High-level safety
There is zero possibility of sandwich attacks or slippage on TheTrade platform. We’re working with isolated liquidity that prevents sandwich attackers from surrounding your pending transactions and manipulating asset prices.
Moreover, our team developed a breakthrough Executor role that makes the process of liquidity transfer safe and fast. Executor gets a commission for withdrawing liquidity and transferring assets to a user.

3. 0% fee transactions
As users will perform trades through TheTrade smart contracts, they will pay a 0% fee to TheTrade per successful trade.

4. DAO essence
DAO is the cornerstone of true decentralization in blockchain. One of the next stages of our development will be the creation of a decentralized organization that will bring new opportunities, including adding new pairs, developing TheTrade ecosystem through voting, etc.

Further plans

Our main goal is to develop solutions for limit orders and other trading processes, creating new earning opportunities. We’re developing DAO which allows adding any asset available if there’s enough liquidity. Our team is also working on the improvement of our huge liquidity pool that will eliminate any liquidity issues on the platform.

DEX limit order concept was a diamond in a rough initially. We did a profound faceting to make it the most precious and exclusive solution available on the market.