Orbs Launches TWAP to Help Traders Tackle DeFi’s Liquidity and Volatility Issues
Orbs has announced the launch of its Time-Weighted Average Price (TWAP) order protocol. Orbs says TWAP is designed to enable digital asset traders and platforms to scale the hurdles of DeFi liquidity and volatility.
Orbs Unveils TWAP Protocol
Orbs, a decentralized layer-3 blockchain infrastructure operated via a secure network of permissionless validators and the proof-of-stake (PoS) consensus algorithm, has rolled out its Time-Weighted Average Price (TWAP) order protocol, to enable decentralized exchanges (DEXs) and automated market makers (AMMs) to support new order types.
Orbs says its new TWAP solution is designed to help crypto market participants to overcome the problem of liquidity and volatility in DeFi, while unlocking new opportunities for them.
The Orbs team has made it clear that while the TWAP system of trading is employed in the centralized finance (CeFi) world by traders to minimize the adverse effect of outrageously large orders on the market, by dividing the orders into multiple smaller trades that are executed at regularly defined intervals over a specified period, using TWAP in the DeFi space has been impossible until now.
This is due to the limited features of Ethereum Virtual Machine (EVM) smart contracts, coupled with the fact that the DeFi ecosystem lacks features designed to manage increased volatility and liquidity issues.
Overcoming DeFi’s Shortcomings
Orbs claim its new TWAP solution significantly reduces material price impacts brought about by large orders on DEXs and AMMs in the DeFi space.
The team explained:
“Obrs’ decentralized backend ensures that all TWAP orders are executed at an optimal price and fair fees without sacrificing decentralization and security. Accordingly, participating DEXs and AMMs grant their users more ways to engage in sophisticated trading activities, especially algorithmic strategies like those commonplace in CeFi, while also experiencing increased liquidity and user volatility.”
What’s more, Orbs claims TWAP also makes it possible for traders to automate their dollar-cost averaging (DCA) crypto investment strategy, empowering traders to enter market orders with longer intervals and extended duration. In other words, the TWAP protocol can function as an automated DCA trading bot that requires minimum supervision by a trader.
The team says TWAP smart contracts come with both the maker and taker components. The “maker” (trader or order creator) controls parameters related to the order itself, such as limit, price, size, expiration, and more, “takers” control all things pertaining to order execution.
Commenting on the launch of TWAP, Nadav Shemesh, CEO of Orbs said:
“We are always looking at CeFi as a template for new protocols that can enhance our stakeholders’ experience, and TWAP is no exception. Until now, it has been 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.”
In addition to creating TWAP, Orbs has also launched a new intuitive and user-friendly interface that can easily be integrated by DEXs and AMMs into their existing infrastructure. The team says the new UI allows users to customize parameters and initiate TWAP trades in a frictionless way.
