The post Elektrik’s Solution to Onchain Iceberg Order Challenges appeared on BitcoinEthereumNews.com.

Blockchain technology has invented new ways of how financial operations can be performed and by changing the landscape permanently, it has also brought some new challenges. One such challenge in DeFi is the execution of on-chain iceberg orders. Elektrik, a next-gen DEX, offers a solution to this problem using advanced techniques and private mempools. Understanding the Iceberg Order Phenomenon In traditional financial markets, iceberg orders are a strategy where large trades are divided into smaller transactions. It is done to mask the true size of the trade, ensuring minimal market impact and avoiding significant financial repercussions. The name “iceberg” is derived from the fact that only a small portion of the order (the tip) is visible, while the majority remains hidden. When large trades are made public, they can influence market sentiment, potentially leading to price slippage and other unintended consequences. For instance, a massive sell order might indicate a lack of confidence in an asset, prompting other traders to follow suit. Therefore, by breaking down these trades, traders can navigate the market more discreetly. The Centralization Dilemma The current infrastructure for executing on-chain iceberg orders relies heavily on centralized intermediaries like brokers or centralized exchanges. These entities manage the trajectory of the iceberg order’s execution based on various parameters, such as price impact and total amount. However, this centralized approach poses risks. Centralized entities can potentially exploit the knowledge of upcoming trades for their benefit, leading to issues like front-running. It goes against the principles of decentralization and trust that blockchain technology champions. Elektrik’s Decentralized Solution with Mempools In blockchain networks, like Ethereum, when an order is placed, it’s temporarily stored in what’s known as a mempool prior to its execution. Mempools, essentially memory pools, serve as a staging area, allowing transactions to be collated and subsequently incorporated into…

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Filed under: News - @ October 26, 2023 5:18 am