Orbs Unveils New TWAP Protocol for Decentralized Exchanges and Automated Market Makers
Tel Aviv, Israel, September 22, 2022, Chainwire
Orbs’ decentralized time-weighted average price (TWAP) order protocol aims to overcome DeFi’s liquidity and volatility issues while opening up opportunities for traders and platforms.
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Orbs the decentralized layer 3 blockchain infrastructure, introduced a new decentralized time-weighted average price (TWAP) protocol to support new order types for decentralized exchanges (DEX) and automated market makers ( MA).
TWAP is frequently deployed by algorithmic trading strategies in the centralized finance (CeFi) landscape. Traders rely on the Time-Weighted Average Price (TWAP) method to minimize the impact of a large order on the market by dividing the order into multiple smaller trades, with each trade being executed at regular intervals defined over a given period.
Although the decentralized finance (DeFi) ecosystem has grown into a multi-billion dollar industry, the existing infrastructure, primarily the limitations of EVM smart contracts, makes it very difficult to implement TWAP in a decentralized format. On top of that, the current DeFi ecosystem has few features designed to handle the issues of increased volatility and liquidity that regularly occur in the decentralized crypto-economy.
With its decentralized TWAP protocol powered by its Layer 3 technology, Orbs overcomes these shortcomings while simultaneously benefiting merchants and trading platforms by significantly reducing the material price impacts that come from large orders. Orbs’ decentralized backend ensures that all TWAP commands are executed at optimal price and fair fees without sacrificing decentralization and security. As a result, participating DEXs and AMMs offer their users more ways to engage in sophisticated trading activities, especially algorithmic strategies like those common in CeFi, while benefiting from liquidity and activity of increased users.
The protocol also allows users to take advantage of Automated Dollar Cost Averaging (DCA) – an investment strategy in which an investor purchases an asset or set of assets at a defined fiat value according to a pre-determined schedule. The Orbs TWAP protocol can be used to generate an automated version of the DCA strategy, allowing traders to enter market orders with longer intervals and extended durations. In effect, the TWAP protocol can serve as an automated DCA trading bot that does not require any additional input from the trader.
In technical terms, Orbs’ Layer 3 infrastructure extends the capabilities of existing EVM smart contracts. By leveraging network validators as off-chain bidders, Orbs TWAP will allow DEXs and AMMs to unlock new opportunities in a fully decentralized and secure framework.
Orbs TWAP smart contracts consist of two elements: a market maker and a market maker. While the ‘maker’ (user or originator of the order) controls all the parameters related to the order, such as limit price, size, expiration and timeframe, ‘takers’ are incentivized participants who monitor orders and are selected for trade execution after submitting bids. , including lessee fees. The highest bid and the lowest fee are automatically selected for execution.
In addition to the TWAP protocol, the Orbs team has developed a new user interface (UI) that DEXs and AMMs can easily integrate into their existing infrastructure. The new user interface is intuitive and user-friendly, allowing users to customize settings and initiate TWAP transactions.
Nadav Shemesh, CEO of Orbs, notes, “We always see CeFi as a model for new protocols that can improve the experience of our stakeholders, and TWAP (Time-Weighted Average Price) was no exception. Until now, it was extremely difficult to implement a TWAP strategy in blockchain-based financial primitives in a decentralized way using EVM-based smart contracts. With our new TWAP protocol, everyone benefits, whether traders or trading platforms. Along with better liquidity management, support for more sophisticated trading strategies, automated DCA orders, customizable settings and more can also help us attract in-kind institutional participation.
Orbs is a public, decentralized blockchain infrastructure operated through a secure network of permissionless validators and the Proof-of-Stake (PoS) consensus mechanism. The platform serves as a decentralized execution layer between the existing Layer 1 and Layer 2 chains and the application layer. By enhancing the capabilities of EVM smart contracts, Orbs is powering new use cases for DeFi, NFT, GameFi, and other emerging blockchain-based industries.
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