Problem with limit orders

I want to bring up a user experience problem and/or functionality problem with limit orders.

I suggest at least one of two things:

  1. A clearer explanation of how limit orders work on Osmosis.
  2. A change to how limit orders function on Osmosis.

Here’s the details on what happened and why this is an issue.
I have a total of $15k in limit orders open on Osmosis to buy $PASG when it drops to the price of $0.0009. Currently the team is selling tokens to pay for salary and they have been delisted from MEXC, so MEXC is unloading all their $PASG. I placed these limit orders to prevent the price from going below $0.0009. On the Osmosis site when you place a limit order it says “When PASG price is 10.73% below current price”. It does not explain that this is actually a concentrated liquidity order, and it does not say that this order will only fill when the price is exactly at that price and not when it goes below. The current price of $PASG is $0.0008993 and dropping and my limit order is no longer filling.

The $PASG price did not drop that fast. There was liquidity available at $0.0009 to fill the market sells to keep the price above $0.0009 due to the comparatively large limit orders.

If the mechanics behind how limit orders cannot change, then I suggest providing a little more verbage in the description to explain that order will not necessarily fill “When PASG price is 10.73% below current price” for example adding “unless the price drops below the limit order price.” I would argue that this is not actually a limit order.

Instead of a description change, the functionality of the limit orders could be modified so that limit orders have priority fill and would continue to fill at the price they are at until they are exhausted, because a limit order isn’t ranged, it is an exact price, but logically there’s no reason for a range because the price should not be able to drop below that range if the limit order is providing ample liquidity to keep the price at or above that point. Alternatively, there could be some wiggle built into the limit order so that a limit order is harder to get out of range but this would be harder to do since that wiggle room necessary would depend on the price, liquidity, and sell/buy pressure.

The whole point of a limit order is to be able to set a price and forget it. You choose your buy or sell point and when it is reached your order fills whether you are around or not and when you come back your coins have been converted and you are happy and people on the other end of the trade are happy because liquidity was provided. The currently implementation of limit orders does not satisfy the expectation of limit orders and either the expectation should be modified to reflect what is the current function, or the function should be modified to meet the expectations, and the latter would be the better option from an end user perspective.

2 Likes

Hey, I’ve looked into this and believe the cause for this is that those sellers aren’t selling into the Osmosis routing. As a result, the orders aren’t being used directly; instead, they are being filled through arbitrage.

Since the price shown on Osmosis and Coingecko is based on the USDC pool, which has a total spread of 0.3%, the price could be shown as low as 0.0009 * 0.997 = 0.0008973 before an arbitrage transaction became profitable to fill the order in that way.

It appears that your order is being filled at a rate that matches the volume compared to liquidity. The volume you see in the other PASG pools is primarily due to arbitrage between them and your limit.

I can imagine though that it is hard to understand for @Greg_Weld when you compare it to a limit order on a CEX, where it is a hard line which has to be exhausted before price can move below (or above, based on where the order is placed ofcourse).

If Osmosis wants to compete with a CEX-like experience on that field it would be good to approach it is as close as possible I guess, where the concept would be easier to explain and understand. Because in essence an order at a lower price (albeit for an individual or for arbitrage) should not happen when there is a limit order with a better price available. Both for Osmosis as the project as the buyer/seller it is better to prefer that limit order over other routes.

1 Like