Market Balances

Understanding Market Balances

Market balances represent the remaining tokens or coins after a trade has been executed on a decentralized exchange (DEX).

In traditional finance, market orders are commonly fulfilled through intermediaries such as brokers or trading exchanges, where the orders are executed at the best available current price.

Sell orders are matched with the current bid price, while buy orders are matched with the current ask price.

Decentralized Finance (DeFi)

Decentralized finance (DeFi) enables market orders to be executed without intermediaries by leveraging DEXs and liquidity pools, either on-chain or through automated market makers (AMMs).

This significantly reduces the need for intermediaries and associated fees.

Executing Market Orders

To perform a market order on a DEX, users connect their digital wallets (e.g., MetaMask) to the DEX, specify the amount of one asset (e.g., USDC) they want to trade for another asset (e.g., RIN), approve the transaction, and pay a small liquidity provider fee and gas fee.

The user then receives the corresponding amount of the desired asset (e.g., RIN) based on the current market price.