TWAP SWAP

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What is that?

What is TWAP Swap? TWAP swap (Time-Weighted Average Price swap) is a trading strategy in which a large order is split into several smaller orders that are executed over a set period of time. The goal is to achieve an average execution price that is as close as possible to the Time-Weighted Average Price of the asset during that period.

Let's say you have a large amount of A tokens that you want to swap for B tokens, but you don't want to dramatically impact the market.

Example of Using TWAP Swap:

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Steps:

1. Selecting Assets and Time Period:

   • You select tokens A as the source asset and tokens B as the target asset.

   • You set the time period in which you want the exchange to take place (e.g. 1 hour).

2. Initiation of TWAP Swap:

   • You enter the total amount of tokens A to be exchanged and set TWAP swap parameters such as time interval and order frequency.

   • The platform automatically splits your large order into multiple small orders that will be executed evenly over the specified time period.

3. Order Execution:

   • The platform executes small orders over a specified period of time, trying to achieve an average price as close as possible to the time-weighted average price of the asset.

4. Asset Retrieval:

   • At the end of the time period, you receive B tokens at the average price, minimizing market impact and volatility.

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Example Scenario:

1. You have 1000 tokens A in your wallet.

2. You want to exchange them for B tokens within one hour.

3. You use TWAP swap:

   • You specify 1000 tokens A to be exchanged.

   • You set the parameters: execution time - 1 hour, order frequency - every 5 minutes.

   • The platform automatically splits your order into 12 parts and executes them every 5 minutes.

   • At the end of the hour, you receive B tokens at the average price for this period.

TWAP swap simplifies the process of trading large volumes of assets by minimizing market impact and volatility. This allows traders and investors to achieve better trading conditions by avoiding sharp price fluctuations. Using TWAP swap, you can confidently trade large amounts of assets knowing that you will receive a fair weighted average price.