Understanding liquidity routing

Liquidity routing creates deeper markets for traders, and also increases capital efficiency for both traders and Automated Market Maker (AMM) users.

• Traders enjoy the benefits of greater liquidity and depth, even on less popular markets

• Users creating AMM Instructions only need to supply liquidity to certain key markets, but could still receive the fees from secondary liquidity routed markets on some trades.

Let’s assume you want to place an order on the ETH/BTC market buying ETH and paying BTC.

1. Select the price, amount of BTC, and any other parameters relevant to your order type.

2. Routed markets automate the search for liquidity. In some instances your order may be broken into one or more intermediary trades which may be routed through different markets

3. If your order is broken into multiple trades, all of them are executed simultaneously.
   
   

   Open

   

    

• Your orders behave exactly the same way whether or not they are routed. The price you see in the order book is the price you will get.

• If a portion of the order is filled via routing, you will only see one fill for the two assets you are trading. You will not see any of the intermediate trades from other books that combined to make the fill you receive.

• If you submit an AMM Instruction, you will always receive your share of the Spread fee, but may or may not receive a Taker fee depending on your role in the transaction

  • If you are providing the trader’s target asset you will receive the Taker fee (ETH/USDC in the example above)

  • If you are providing liquidity for the intermediary portion of the transaction (BTC/USDC in the example above) you will not receive a Taker fee since that portion of the operation is added as part of the automated liquidity routing logic