On-chain limit orders are buy or sell requests for digital assets executed directly on a blockchain at a specified price or better. Unlike off-chain orders managed by centralized exchanges, these orders reside within a smart contract, ensuring transparent and immutable execution without relying on a third-party intermediary. They allow users to set specific price targets for their trades, which are then filled automatically when market conditions meet those parameters. This approach offers enhanced security and censorship resistance for trading activities.
Context
The implementation of on-chain limit orders addresses the need for more decentralized and trust-minimized trading mechanisms in the cryptocurrency market. Challenges include higher transaction fees and slower execution speeds compared to centralized alternatives. Ongoing development focuses on optimizing these systems to reduce gas costs and improve efficiency, making them more competitive.
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