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Historically, two of the major obstacles to DeFi applications has been depth of liquidity and volatility. For instance, one large position or order can cause disproportionate price swings for the token in question. However, Orbs, a pioneering innovator in the DeFi realm and the foremost L3 protocol, has addressed this with its new Time-Weighted Average Price (TWAP) protocol.
This new product will help both decentralized exchanges and Automated Market Makers by splitting large orders into smaller deal sizes, thus minimizing the impact of the deal upon the market. After the protocol has split the order into smaller orders, it executes the orders at varying intervals over a predesignated time period, thus ensuring the integrity of the price action of a cryptocurrency and ensuring a regular source of liquidity is met.
TWAP inside the DeFi arena
The TWAP model has been traditionally used within the CeFi setting, through the use of algorithms, however until now, the process has not been supported within the DeFi arena due to the lack of sophistication of EVM smart contracts. Orbs TWAP smart contracts are the engine behind this new protocol, and they work by enhancing the sophistication of EVM smart contracts.
This new approach to deal execution will benefit the exchanges, the cryptocurrencies and indeed the traders themselves by leveling out wild price swings that ensue from larger deal sizes.
Orbs TWAP protocol backend has been developed to fairly execute a series of deals at the optimum prices with the fairest fees for the user, while maintaining decentralization and security.
This product will give its traders new ways to trade and a more sophisticated model for trading, such as through algorithmic strategies which are commonplace in the traditional money markets.
According to the CEO of Orbs, Nadav Shemesh,
“We are always looking at CeFi as a template for new protocols that can enhance our stakeholders' experience, and TWAP (Time-Weighted Average Price) was no exception. Until now, it has been extremely hard to implement a TWAP strategy in blockchain-based financial primitives in a decentralized manner using EVM-based smart contracts. With our new TWAP Protocol, everyone benefits - be they traders or trading platforms. Besides managing liquidity better, support for more sophisticated trading strategies, automated DCA orders, customizable parameters, and much more can also help us attract institutional participation in-kind.”
Dollar cost averaging strategy
Traders can also engage in dollar cost averaging strategies, which are becoming very popular in the crypto sphere. This is where a user buys or places a series of orders over time with a fixed dollar amount on a regular basis, regardless of the crypto price. For many, this proves to be an efficient and disciplined way of investing, while removing the stress of typical investing.
Finally, Orbs has unveiled a new intuitive user interface for DEX’s and AMMs to easily implement within their platforms.