On top of being able to send your orders out to the Hikari OTC pools, we allow you to also execute your orders on open markets using our proprietary HikariSwap algorithms.
The Advanced Trade Feature.
HikariSwap's innovation is in its lit market execution algorithms. Similar to the institutions in TradFi, we've recreated the TWAP and VWAP algorithms for DeFi (read more about Execution Algorithms).
We've implemented two algorithms out of the plethora of order types you see across traditional venues and below are some resources to explain these algos and how its used on HikariSwap.
The Time Weighted Average Price (TWAP) Algorithm
TWAP = (TP1+ TP2… + TPn) / n, where;
TP1 is the price at the first timepoint, and
n is the total number of timepoints.
To simplify, we allow you to have flexibility on the execution. The default variables will give you a range on the TWAP that allows you to incur less than 1% price slippage per trade (dependant on your order size), and let you execute the order dependant on the parameters of the trade.
The Modified* Volume Weighted Average Price (VWAP) Algorithm
VWAP = (V1 x P1 + V2 x P2… + Vn x Pn) / Total Volume, where;
V1 and P1 are the volume and price an asset was traded at on the first trading environment, and
n is the total number of trading environments used in the calculation.
Hikari has modified this algorithm in order to better suit the needs of the decentralized space.*
To simplify this, We take your total token amount allocation and execute trades onto the chart whenever we detect an abnormal order size on the open markets. For example, if a token is being traded with relatively low volume and a large whale exits their position with high slippage - our VWAP algorithm will automatically place a bid for you to technically allow you to purchase your tokens for a discount from the spot price.
Post Trade Settlement
Once the parameters are met you will be able to see your trade execute. Any residual tokens that were not swapped out would be put back into your original OTC order and the tokens you have purchased will be settled post trade.