What is DCA?

DCA (Dollar Cost Averaging) orders are used to periodically increase you exposure to a certain asset. Users can set:

  • Which asset they want to sell

  • Which asset they want to buy

  • The period after which the gradual exchange will trigger

DCA use-case:

  1. You have $8,000 in USDT and are looking to buy some ETH

  2. However, ETH's price is currently pretty volatile, so you're concerned about buying it now, and seeing the price dip.

  3. So, you figure the best option would be to have an automation where you can gradually buy $8,000 of ETH over a set timeframe. This ensures that you buy ETH at its average price during that period, and not a specific high or low.

  4. To get this done, you go to DeFi Saver's Exchange tool, located in the sidebar:

  1. On the new screen, you open the DCA tab:

Please note that your ETH will be wrapped as WETH in order to be compatible with Limit Orders.

  1. You input that you'd like to sell $500 of your USDT for WETH, with a buying interval of 1-day. This means that every 24 hours, you will buy $500 worth of WETH at its current price, and after 16 days, you'll buy the full amount of WETH.

So, let's use hypothetical values to simplify our strategy and calculation:

  • Today, 1 WETH = $1000

  • Tomorrow, 1 WETH = $950

  • The day after, 1 WETH = $1050

  • The next 5 days, it stays at $980

  • The next 5 days, it stays at $1000

  • The next 3 days, it stays at $990

That makes it 16 days, after which you would have spent the full $8,000 USDT on WETH.

After this period, you would have approximately 8.07 WETH, and the average buying price across the 16 days would be $991.49

This means that you bought at a lower price than the first day, the third day, and between days 9 and 13.

This allowed you do be mitigate the risk of price volatility, and ensures that you did not buy WETH during price peaks, but maintained a price that was around average.

On DeFi Saver, a DCA order is technically an automated strategy performing a swap between the two selected tokens periodically (e.g. every 7 days), regardless of the exchange rate at that moment.

Any enabled DCA swaps will be executed at the configured period, though the execution time can be delayed in case of high network congestion. Specifically, the swaps will only be executed when/once the estimated transaction fee is less than 5% of the value of the tokens being swapped.

DeFi Saver takes a 0.3% for DCA orders, as shown on the UI.

Active DCA Orders and History

Once you active DCA order(s), you’d be able to find them on the DCA page alongside the history of executed DCA orders.

Cancelling DCA Orders

All currently active DCA options can be manually canceled at any point, fully at your discretion.

Canceling will require an on-chain transaction, so there will be transaction fees involved.

Related Articles:

  • What are Limit Orders?

  • Exchange

  • Use-case

  • Fees

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