Order Execution

Carbon DeFi strategies are created by individual users known as “makers” and composed of one or two onchain limit and range orders. Execution of a maker's orders require the involvement of “takers” -- i.e., spot traders such as direct traders on app.carbondefi.xyz/trade, arbitrageurs and DEX aggregators.

The settings of each user's strategy, the strategy's liquidity, total network liquidity in the token pair, as well as network congestion affect the likelihood of execution in their strategy.

Liquidity and Ranges

Makers submit orders with their custom ranges defining the prices at which they’re willing to buy or sell their tokens. An order with a relatively wide range spreads liquidity across a larger number of prices, whereas an order with a relatively tight range concentrates liquidity within a smaller number of prices. Orders with more liquidity concentrated at a given price are more likely to get their orders executed when the market moves into that price.

For example, consider two separate Carbon DeFi orders to buy ETH using USDC. Both orders are funded with the same amount of USDC tokens, but have different sized ranges. Jen's Order A offers to buy ETH in the range of 1800-1900 USDC. Tom's Order B offers to buy ETH in the range of 1800-2000 USDC. Jen's order slices the allocated budget across a tighter range, which means more tokens per each price point in the range. When the external market price of ETH reaches 1800, Jen's Order A is more likely to execute first, since it has a larger amount of liquidity concentrated at 1800 and can therefore offer a better price to the taker.

Gas

Gas cost is also factored into spot trading requests submitted to Carbon DeFi. A maker order may be offering a price that is desirable for takers, however the gas costs involved with filling the trade may make the trade undesirable, resulting in non-execution. The same holds true for arbitrageurs. Typically an arb takes trades on Carbon DeFi (and executes the relevant maker order) if it is profitable for the arb to do so, and such profit measurements include the current cost of gas.