EMERGENCY ALERT: NEVER USE DSWAP FOR LARGE TRADES

Did you catch the dip?

Whatever you think of the LVL @psyberx project, I think you can agree that @baconface is a happy camper having scooped 2.1 Million LVL tokens for about 2 cents of SWAP.HIVE

How could something like this be possible?

It all has to do with orderbooks, and the dangerously programmed @dswap. Don't use it folks.

I mean, it works. As long as the market book liquidity holds up. But not with big purchases or dumps.

With a little investigation, I found this:

I am sure even @tbnfl4sun wishes he would have just listed a sell order on the market place now. His huge dump swept the orders for about 500k LVL, then the last 2.1M tokens went to @baconface.

@baconface might just be a bot that lists low orders like these for this exact occurance. The 'fat finger' trade when you send too much liquidity at the order books, something that @dswap makes much to easy to do, in my humble opinion.

How much liquidity do the order books hold?

That depends on the market, but the truth is, not much. You should only expect a couple hundred dollars in liquidity in most populated markets on hive-engine. Many projects don't have $50 dollars of 'dump' liquidity on the books; this is the reason that liquidity pools and linear liquidity projects have become so popular.

There is an opportunity cost to locking up liquidity in order books.

Market 'order books' are a tool, and its worth learning a bit about it if you want to learn to use tokens.

Markets are two books, the Buy Order book and the Sell Order book. The highest buy order (the 'bid') and the lowest sell order (the 'ask'), make up the market spread.

On developed markets like LEO, robots magically work the spread, tightening it against each other and making it moderately useful for people buying and selling moderate amounts of tokens.

But at any moment if someone wanted to sell say, $10,000 dollars worth of LEO, the buys could not stand up.

Its worse on almost every other market.

Here is the bottom of the barrel buy orders for popular token ONEUP:

As you can see there is about 20 HIVE within the 0.03 range, then there is some good liquidity, about 110 HIVE at about a 20% discount, then another 10 HIVE of mixed bag ladders, and there is @baconface, ready to buy any amount of these tokens for very little risk, just 0.25 swap.hive in play.

The risk reward for super low buy orders is really good, but not so much for moderate 50% off liquidity. This creates a situation where dumping tokens all at once hits extreme diminishing marginal returns. Sellers must be patient.

Buyers have to be patient too, the same phenomenon happens on the buy side, especially with dividend paying tokens, where if you list the tokens on the market, you miss out on the dividends.

This, again, is one of the reason liquidity pairs in pools is a superior concept. But the same lesson remains:

TRADE IN CHUNKS PEOPLE!

Thank you, this emergency broadcast has ended.