TWAP Orders
Time-Weighted Average price Protocol
Last updated
Time-Weighted Average price Protocol
Last updated
Pangolin Exchange ยฉ 2023
Pangolin is one of the first Avalanche-native DEXs that will allow you to utilize TWAP orders for any token on the platform.
Note: TWAP Orders are only available on Avalanche.
TWAP (Time-Weighted Average Price) is an algorithmic trading strategy that divides an order into multiple smaller trades that are executed at regular intervals over a specified period of time.
Make sure your Wallet is connected to Pangolin.
Go to https://app.pangolin.exchange/#/swap and toggle to "TWAP" in the Trade widget.
Makers - The first entity in the dTWAP protocol are DEX traders that submit new orders to the dTWAP EVM contract. They set all order parameters such as limit price and expiration. The dTWAP contract enforces these requirements in a trustless manner.
Takers - Incentivized third-party participants that monitor all live orders and submit bids on the best path to execute their next segment. The dTWAP contract selects the best bid and guarantees that the path that provides the best price to makers is the one executed.
Orbs Network has dozens of independent validators running Proof-of-Stake consensus with over $100 million staked. The network has been running in mainnet since 2019. All Orbs Network validators are takers and participate as honest bidders in the protocol, guaranteeing that orders are executed 24/7 with high redundancy and best price.
PRICE IMPACT REDUCTION
When a trade is relatively large or involves a low-liquidity pair, price impact will be high and cause significant losses to traders.
TWAP eliminates price impact by spreading the trade over several minutes. This gives arbitrageurs a time window to close price discrepancies and bring the reserves back to the fair market spot price.
AUTOMATION OF DOLLAR-COST AVERAGING (DCA)
DCA is an investing strategy that purchases an asset on a recurring long-term schedule (ie. on every Monday).
The goal behind DCA is to average out abnormal market conditions and lessen the impact of short-term volatility on the overall purchase. A TWAP strategy can fully automate the DCA process.
