Range Orders

Range Orders

Customizable liquidity positions and the ability to provide a single asset allow for a new trading approach on the KoalaSwap protocol: range orders.

In traditional order book markets, you can set a limit order to buy or sell an asset at a specific price, waiting for it to be filled later. With KoalaSwap, you can mimic this by providing liquidity with a single asset within a chosen price range. For example, you can set a range order expecting it to execute when the market price reaches that range, then withdraw the target asset afterward.

Unlike traditional limit orders, which might charge fees, range orders on KoalaSwap earn fees for you while they’re being filled, since they’re a form of liquidity provisioning.

Possibilities of Range Orders

The AMM design enables some limit order styles but not others. Here are four examples with their traditional counterparts:

• Take-Profit Orders: The current USDT/ETH price is 1,500 USDT/ETH. You want to sell ETH for USDT when the price hits 1,600 USDT/ETH. This works—provide ETH at 1,600, and it swaps to USDT when the price crosses your range.

• Buy Limit Orders: The current USDT/ETH price is 1,500 USDT/ETH. You expect ETH to drop to 1,000 and rebound, so you provide USDT at 1,000 USDT/ETH. When the price falls, it swaps to ETH.

In KoalaSwap, assets are split above and below the current price: the higher-priced asset is above, the lower-priced asset is below.

The following styles can’t be replicated due to this separation:

• Buy Stop Orders: Price is 1,500 USDT/ETH. You want to buy ETH at 2,000 USDT/ETH after it hits 2,000. This isn’t possible, as the range above 1,500 is in ETH, not USDT.

• Stop-Loss Orders: Price is 1,500 USDT/ETH. You want to sell ETH for USDT at 1,000. This isn’t possible, as the range below 1,500 is in USDT, not ETH.

Important Note: If the price crosses your range and then reverses before you withdraw, your order won’t be fully filled. You’ll still earn LP fees during this time, but to exit fully in the target asset, monitor your position or use a third-party manager to withdraw when filled.

Fees

Fees from your liquidity position are paid in both tokens of the pair (e.g., ETH and USDT). After your range order executes, you’ll receive a small amount of both as rewards.

You can choose how wide your range is. A wider range might earn more fees if the price moves within it, but it increases the risk of the order staying unfilled if the price reverses.