What Is a "Limit Order" and Why Is It Not Standard on a Basic AMM DEX? ⎊ Path

What Is a “Limit Order” and Why Is It Not Standard on a Basic AMM DEX?

A limit order is an instruction to buy or sell an asset at a specific price or better. Basic AMM DEXs use a continuous function (like x y = k) to determine the price dynamically based on the pool's reserves, not an order book.

Therefore, they do not natively support fixed-price limit orders. Newer AMM designs or external services are required to implement limit order functionality.

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Glossar

Decentralized Exchange

Architecture ⎊ A decentralized exchange (DEX) fundamentally diverges from traditional order book exchanges through its reliance on smart contracts and blockchain technology to facilitate peer-to-peer trading, eliminating the need for a central intermediary.

Limit Order

Instrument ⎊ A limit order is an instruction to trade an asset at a specified price or better, providing the trader with precise control over the entry or exit cost, unlike a market order.