Garden Finance’s Approach to Minimizing Slippage During Crypto Swaps
Trading or swapping on DeFi protocols often comes with the frustration of slippage, a situation where trades execute at prices different from expected.
Slippages usually result from low liquidity and market volatility, leading to discrepancies between the anticipated and actual trade prices.
This occurs when there aren’t enough orders in the order book to match a trade at the intended price.
For example, if a trader places a large buy order, but the order book doesn’t have enough sell orders at that price, the trade may then execute at higher prices than expected.
Similarly, any substantial “sell” order can receive less for the asset if there aren’t enough buy orders at the desired price.
As a DeFi platform, Garden Finance tackles this issue in the Bitcoin and global crypto ecosystem by providing an effective method to minimize slippage and improve trading outcomes.
How Does Garden Solve the Problem of Slippages?
Garden Finance addresses this with its innovative liquidity impact strategy.
This technique enhances trade execution by focusing on real-time liquidity conditions. With this, the Garden protocol ensures that trades are executed as close to the expected price as possible, by dynamically adjusting trade prices based on current liquidity in the order book.
Let’s put it in practical terms: Garden’s approach is particularly beneficial in the following markets:
- High-volatility markets.
For instance, during sudden market movements, such as those triggered by major news events or regulatory changes, liquidity can become variable to some extreme levels.
Swapping your asset with Garden means a better way of sailing off of these fluctuations. The system continuously adjusts prices based on the most recent liquidity data, minimizing the impact of such volatility on trade execution.
2. Large-scale transactions.
Institutional investors or individuals with substantial holdings may place large orders that can have a big impact on market prices.
Without a solution like Garden’s liquidity strategy, such orders could lead to hefty slippage, resulting in less favourable execution prices. Adjusted prices that are based on real-time liquidity help ensure that even large trades are executed at more usual and favourable prices, to reduce the risk of adverse price impacts.
3. Less liquid assets.
In markets where trading volumes are lower, the risk of slippage increases due to the limited availability of buy or sell orders.
Garden’s system of continually evaluating liquidity and adjusting prices helps mitigate the challenges associated with trading in such markets, meaning that traders dealing in niche or emerging assets can achieve better trade outcomes and avoid the pitfalls of slippage.
The liquidity impact strategy relies on advanced algorithms and continuous data analysis. Garden’s system monitors market conditions and liquidity levels to make timely adjustments. A proactive approach like that handles the effects of market volatility and ensures that traders receive optimal execution prices.
This is why the ability to dynamically fix prices based on real-time data reduces slippage and also enhances overall trading efficiency and reliability.
Offering an accurate — more accurate reflection of market conditions, the platform helps traders avoid unexpected price changes, which leads to more consistent and predictable trading outcomes slash experience and enhances overall satisfaction and confidence in the trading process.
In summation, slippages aren’t a novel or unusual thing that happens in the crypto market. Slippage is a common challenge when trading on decentralized exchanges and Garden addresses them with its liquidity impact strategy, which adjusts trade prices based on real-time liquidity data.
Needless to say, with this solution has provided for high-volatility markets, large-scale blockchain transactions, and less liquid assets, the Garden protocol is improving its overall trading experience and boosting its reputation for reliable efficiency.
Check out Garden’s official website and social media for more information:
