Let's talk about limit orders for a second, and how I use them to buy tokens for less than market price, or sell them for more than market price, that is to say: how I avoid paying more than I should and saving as much as I can, okay?
Let's take ampLUNA/USK as an example.
Okay. You know that $ampLUNA is ALWAYS swapped or unstaked to MORE $LUNA, right? So 1 $ampLUNA > 1 $LUNA, always.
Look at the $ampLUNA quote vs. $LUNA quote on @TeamKujira FIN
- $ampLUNA: $1.59
- $LUNA: $1.66
$ampLUNA is a full $0.07 LESS! And that's not considering the multiplier!
Here's the thing. I want to buy $ampLUNA for LESS than $LUNA, but if look at the order book, there're sales of $ampLUNA for less AND for more than $LUNA.
How do I only buy for less?
Limit orders to the rescue!
I set a buy limit order of ALLES my $USK at $ampLUNA at 1.611.
That translates to I will buy all $ampLUNA for that price, OR LESS, but NOT ONE PENNY MORE!
And, when I execute that order, I clean out the low-priced $ampLUNA. My spreadsheet calculates my price: $1.5793/ampLUNA.
I'm bridging the $ampLUNA to the Terra blockchain, where I'll swap that to $LUNA then bridge it back to @TeamKujira blockchain.
While I'm waiting on the assets to bridge over to Terra, let's look at when somebody 'fat fingers' in a market order for $LUNA: BUY AT ANY PRICE!
What happened is this: the buyer just bought $LUNA from my sell-(limit)-orders.
Do you know what prices I set for those orders?
Person X just bought $LUNA from me for $2 (bad, but not so bad, compared to the $1.64 price quote) and
... for $3.50/LUNA.
That means for every $LUNA this trader bought, I get to buy 2 $LUNA.
Or $ampLUNA, seeing it's still on sale vis-à-vis $LUNA.
In sum:
Market orders
The market tells you the price.
Limit orders
Whether you're a maker (selling tokens) or taker (buying them), YOU set the price: YOU determine when your orders execute, no matter what the market does.
Downsides
Now, is there a downside to limit orders? Sure. What is the downside? Or, when do I not use limit orders?
If the market is going up, and it KEEPS going up, and I want the tokens now, I do a market order.
...I could do a higher-than-market limit order, I suppose.
Why? Because if I place a low buy-limit-order in a rising market:
- I don't get the tokens
- My liquidity just gets stuck in the unfulfilled limit order, like, ... forever!
A double-loss, but it's not as bad as that because canceling a limit order is super-cheap and easy.
The other downside to limit orders is this: patience.
If you want token x, and you know it's overpriced right now, you place the buy-limit-order, and you wait.
And you wait and you wait and you wait. Hours. Days. Weeks. For $LUNA sell: more than a month.
You. frikk'n. WAIT.
For those of you used to the spontaneity of market orders, the long-drawn-out battle of trading on value with limit orders can be really frustrating.
But the payoff, frenz.
The payoff.
Somebody just bought $LUNA from me at $3.50-per.
WHEN it comes, the payoff is SO SWEET! 😈
I use limit orders a lot now. It makes arbitration JUST. WORK, because slippage – so deadly to arbitration – isn't there anymore, and, also, when somebody fat-finger-sells $KUJI or $wETH or whatever, my buy-limit-order-nets catch these tokens WAY below market price.
I recommend, if you'd like to check out limit-orders, to put in a few $5 or $10 buy-limit-orders just below market price, or sell just a few tokens just above market price.
Do that bunches of times. Get the feel of it.
I think you'll come to like trading with limit orders. 😊🎉
The ampLUNA Cross-chain arb
As described above, you can swap $ampLUNA to $LUNA, and always at a swap of 1 $ampLUNA to more than 1 $LUNA on the Terra blockchain. Let's do that now.
Okay, the bridge of $ampLUNA from Kujira to Terra took no time, ...once the broken bridge was fixed.
Terra has had MULTIPLE bridging problems this past year. This is very concerning to me.
I swap the $ampLUNA to $LUNA on @terraswap_io, which has a better swap than @astroport_fi.
You see I swapped 33 $ampLUNA to 36 $LUNA. But I've been buying all the $ampLUNA on FIN for a price LOWER than $LUNA.
That is to say: I bought $LUNA via $ampLUNA, discounted, ...TWICE
- once for the discounted price on FIN
- then twice for the swap of more $LUNA from thin air 😎
Let's bridge that $LUNA, and the $LUNA-stake-rewards, back to Kujira using https://bridge.terra.money/.
I bridge the $LUNA, and the transfer takes seconds, ...
et voilà! I have MOAR $LUNA in my Kujira wallet.
I have MOAR-MOAR $LUNA, actually, because of the sale and arb on $ampLUNA.
Remember, folks:
liquid stake token = token PLUS stake rewards
That means a liquid stake token should ALWAYS be priced HIGHER than its underlying token.
When I see otherwise, I buy the liquid stake token.
I buy it... HAÄRHD! 😤🔥🔥🔥
You do what thou wilt with this α.
