I think implementing order types such as limit and stop orders would encourage users of CEX’s to start using Uniswap. This would in turn increase volume and overall be good for the platform as a whole.
As an example, Matcha.xyz offers limit orders right now for specific pairs.
What do you guys think? Would implementing limit orders help or hurt Uniswap, and why?
This is a nice idea but given how liquidity is provided on Uniswap and the AMM model, I don’t think that it is possible to add limit orders to the protocol.
I think it is still prossible to have limited orders and an AMM. Perhaps, you could make an order that will buy x amount of coins when it reach y prices. If the prices drops, or more liquidity is provided (less slippages), the order will be executed.
It’s certainly doable. The same logic is being done now with slippage tolerance, it needs only to be appended to swap.
This could be done simply by offering a incentive (fixed fee to pay for gas cost + profit) for bots to call into the smart contract and execute the trade. This way it doesn’t even need changes to the core contracts.
(this could also be solved by executing all eligible orders whenever the swap contract is called, but I don’t think it’s a good idea)
May I ask why you think your second solution is worse? Would it cause a significant increase in gas costs for the contract to do this after executing market orders?
It would certainly add value for traders to be able to use limit orders aswell. A similar system for liquidity providers will also be interesting. Adding liquidity to the pool at a pre chosen point or withdrawing liquidity at specific price point. When liuidity provider would be able to withdraw liquidity at specific price point he would limit the exposure to impermanent losses. Being able to control risks for liquidity providers might attract more liquidity to the pools
That’s interesting, but there’s still the fact that the liquidity always needs to be there exactly when it’s needed that might cause some problems in implementation.
Nothing insurmountable if the community decides to go that route. Simple things like FIFO or a dynamic queue based on limit price could be expanded on. Though they also have flaws that would need addressing, like people abusing the queue system to game LPS. But again, nothing is insurmountable!