CoW Swap Improves the Limit Order Experience with Partially Fillable Limit Orders

CoW Swap is excited to announce that partially fillable limit orders are now live.

Partially fillable limit orders, unlike traditional “fill or kill” limit orders, are executed gradually as liquidity becomes available at the specified limit price. This means that your limit orders will complete much faster, as they can gather liquidity over time rather than all at once.

Let’s say you want to place a limit order for $10,000 worth of ETH at a price of $1,500 per ETH. With fill or kill limit orders, this trade would only be executed if CoW Swap can find the entire $10,000 worth of ETH at $1,500 per token. If this liquidity is not available in full, the order would not go through.

With partially fillable limit orders, however, the same trade can be executed in smaller increments over time. For example, if there were only $1,000 worth of liquidity for ETH at a limit price of $1,500 when you first place your order, CoW Swap would execute a trade to capture that $1,000 and also execute subsequent trades that it finds at your limit price until the entire $10,000 order is filled.

Partially fillable limit orders have several benefits:

• Fast order fills regardless of market conditions
• Increased chance of CoWs (Coincidences of Wants)
• Surplus capturing trades

Let’s explore how each benefit improves your trading experience.

Fast Order Fills Regardless of Market Conditions

The main advantage of partially fillable limit orders is that your trades will execute (at least in part) even during times of low market liquidity.

Fill or kill limit orders can take a long time to execute, since there needs to be enough liquidity available to execute the entirety of your trade at your limit price. This issue is solved with partially fillable limit orders, so you can always expect fast, efficient order completion regardless of market conditions.

Increased Chance of CoWs

CoW Swap was built on the concept of “Coincidences of Wants” (CoWs) — an economic phenomenon where two or more traders can swap assets with each other peer-to-peer, without needing to use on-chain liquidity. On CoW Swap, orders are processed in batches that make this peer-to-peer matching possible.

Since partially fillable orders fill up over time, rather than all at once, they get more chances to be matched with other orders in a CoW. This, in turn, means that you get reduced gas fees and zero liquidity pool fees.

For example, if you are attempting to make a $10,000 trade, a traditional fill or kill order will be sent to a single batch and only get 1 chance to find a CoW (which may be unlikely for a large order.) With partially fillable orders, your order could participate in all batch auctions and get a chance to find multiple CoWs against a bunch of smaller orders until the order is filled.

Surplus Capturing Trades

Partially fillable limit orders are “surplus capturing,” meaning that any price surplus your trade experiences will get passed along to you. If you submit a trade at a certain limit price, but it can actually be executed for less, the protocol will make the trade for the lower price and pass the savings on to you.

For example, if you set a limit order for ETH at $1,500, but the protocol sees that there is actually an opportunity to buy ETH for $1,450, it will buy at this price and pass the $50 in “surplus” on to you.

In practice, surplus capturing orders mean that CoW Swap will find enough surplus (price improvements) at the time of execution to cover what will be your fees so that they don’t affect your orders’ limit price.

Uses for Partially Fillable Limit Orders

Partially fillable orders have many advantages for one-off transactions and everyday retail traders, but they really shine when put to work as a part of a broader strategy.

Here are some trading strategies that work well with partially fillable orders:

• Buybacks for DAOs: Partially fillable orders provide great benefits for DAO treasury management. Imagine that a DAO wants to perform a large buyback of its token at a certain price. Rather than having to coordinate with multiple stakeholders (such as multiple investors who may want to sell the token) and time the market perfectly, these DAOs can simply set a partially fillable limit order to buy their token for a certain price and buy tokens from the market as liquidity at a favorable price becomes available.
• Buy & Sell Walls: Partially fillable limit orders can be used to set buy & sell “walls” for continuous trades. For example, a trader can submit a partially fillable order that is set to purchase ETH any time it drops below a certain price and sell it any time it goes above a certain price.
  This is a beneficial use-case for projects that have launched or are launching a token. The nature of token launches makes it hard to predict how the token price will behave initially — something that has a deep impact on the public perception of the project. With partially fillable limit orders, projects can strategically buy and sell their token to ensure that it doesn’t go outside of a certain price range.
• Stablecoin Arbitrage: Stablecoins are a cornerstone of the crypto industry. For most use-cases, stablecoins are reliably pegged to $1, but, on the micro-level, they are usually fluctuating by a few hundredths of a cent at all times.
  Partially fillable limit orders can be used to capitalize on this arbitrage by setting a 1:1 trade order to swap between stablecoins (such as USDC and DAI). Since partially fillable limit orders on CoW Swap are surplus capturing, this trade will only execute when the price of the stablecoins moves such that there is enough surplus to cover fees. Often, this means that there is also enough surplus to make a profit, so traders may end up swapping $1,000 USDC, for example, for $1,050 DAI.
  It’s important to keep in mind that this strategy is really only worthwhile when trading in large amounts. The volatility of stablecoin prices is usually so minimal that it takes rather large amounts of capital to make arbitrage worth it. Remember to Do Your Own Research.

Get Started with Partially Fillable Limit Orders on CoW Swap

Partially fillable limit orders are now enabled by default for all limit orders on CoW Swap. If you’d like to disable partially fillable orders and go back to fill or kill orders, you can do so through a toggle in your trade settings.

As with all other order types on CoW Swap, partial fills:

• Aggregate liquidity from the best prices available on-chain
• Improve prices via Coincidence of Wants (peer-to-peer matching)
• Protect users from MEV
• Take fees in the sell token, not in ETH (unless you’re selling ETH!)
• Don’t charge for failed transactions
• Are free to place and free to cancel

Give partially fillable limit orders a try today and let us know what you think by reaching out on Twitter or Discord!