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Range Orders

The ability to customize liquidity positions and single-sided asset provisioning enables a new approach to trading with automated market makers known as a range order.

In traditional order book markets, it is straightforward for individuals to place limit orders, specifying their desired buying or selling price for an asset. These remain open and can be executed at any uncertain time in the future.

With range orders in Intrinsic, a user can simulate a limit order by providing a single asset as liquidity within a defined price range. Similar to traditional limit orders, range orders can be configured with the anticipation of execution at a later time, and once the spot price crosses the entire range, the desired asset becomes accessible for withdrawal.

In contrast to certain markets where fees are associated with limit orders, the range order maker in Intrinsic earns fees throughout the order-filling process. This is because the range order functions as a liquidity provision mechanism rather than a conventional trade.

Types of Range Orders​

The design of automated market makers (AMMs) enables the implementation of certain types of limit orders while others cannot be replicated. Here are four examples comparing range orders and their traditional counterparts: the first two are achievable using AMMs, while the latter two cannot be replicated in the same way.

It is important to note a key difference: range orders, in contrast to traditional limit orders, will remain unfilled if the spot price crosses the specified range and then reverses to cross in the opposite direction before the target asset can be withdrawn. While the Liquidity Pool provider will continue to earn fees during this period, if the intention of the LP provider is to completely exit with the desired destination asset, they must monitor the order and manually withdraw their liquidity once the order has been filled. Alternatively, if one is available the LP provider can utilize a 3rd party position manager service to handle the withdrawal on their behalf.

Limit Sell Orders​

Suppose the current price of a BPD/RBTC pool is 30,000 BPD/RBTC. Your intention is to exchange your RBTC for BPD when the price of RBTC reaches 31,000 BPD/RBTC. In this scenario, it is feasible to achieve your goal by providing RBTC liquidity at a price of 31,000 BPD/RBTC. The order will be filled once the spot price crosses your position, which is denominated in the higher-valued asset, RBTC.

Limit Buy Orders​

Suppose again the current price of a BPD/RBTC pool is 30,000 BPD/RBTC. You anticipate a correction downward where RBTC could drop to 28,000. With this expectation, you plan to set a range order to exchange BPD for RBTC at a price of 28,000 BPD/RBTC. This strategy is feasible since the price range below the spot price is denominated in the lower-valued asset, BPD. By providing BPD at a rate of 28,000 BPD/RBTC, you can execute the swap for RBTC when the spot price of RBTC falls below 28,000 BPD/RBTC.

As described in the aforementioned examples, Intrinsic employs a distinct arrangement where the two assets paired in a pool are divided into separate sections located above and below the spot price. The higher-priced asset is positioned above the spot price, while the lower-priced asset resides below it.

The next 2 examples demonstrate limit order styles that cannot be replicated due to the segregation of assets in terms of their prices.

Buy Stop Orders​

The existing price of BPD/RBTC pool is 30,000 BPD/RBTC. Anticipating a surge in the price of RBTC to reach 33,000 when it reaches 31,000 BPD/RBTC, you intend to set a range order from BPD to RBTC at a rate of 31,000 BPD/RBTC. However, this is not feasible since the price range above 30,000 BPD/RBTC is based on RBTC, making it impossible to provide the required BPD at your desired price for swapping into RBTC.

Stop-Loss Orders​

The present value of a BPD/RBTC pool is 30,000 BPD/RBTC. With an expectation of RBTC plummeting to 26,000 after dropping below 28,000, you intend to set a range order from RBTC to BPD at a rate of 28,000. However, this cannot be accomplished as the price range below the current spot price is denominated in BPD, making it impossible to allocate the required RBTC at 28,000 for swapping into BPD.

The fees associated with your liquidity position will be calculated in both tokens of the respective pair. In any of the mentioned scenarios, whether you swap RBTC for BPD or vice-versa, a small amount of both RBTC and BPD will be credited to your account as reward for providing liquidity.

The user has the flexibility to determine their approach to concentration when setting range orders. Opting for a broader range can potentially generate higher fees if there is a significant price movement within that range. However, this choice comes with the trade-off of an increased risk of having the order unfilled if the spot price reverses before covering the entire range.