A quoted price is not an execution promise
An exchange brings buyers and sellers together. A centralised venue commonly holds customer balances and operates an order book. Decentralised venues use smart contracts; some use liquidity pools, while others use order books. The design changes custody, execution and operational risks.
An order book lists bids to buy and asks to sell. The highest bid and lowest ask define the quoted spread. Available size at each price determines how much can trade there.
Market and limit orders
A market order prioritises execution against available liquidity. It does not guarantee the last displayed price. A larger order can consume several price levels.
A limit order sets a price boundary. It can execute partly, wait without filling, or never execute. Whether it adds liquidity or immediately takes it depends on its price and the venue’s rules.
Liquidity, price impact and slippage
Liquidity concerns the ability to transact without a large price change. Volume alone does not show the depth available for your order at this moment. Price impact is the effect of an order on execution prices. Slippage describes a difference between an expected price and the execution obtained; terminology can vary across platforms.
For a pool-based trade, the pool design and reserves affect the exchange rate as the order is executed. A displayed tolerance is not a guarantee that the transaction will succeed or that the overall trade is sensible.
Count the whole cost
Consider the spread, trading fee, price impact, network fee and any withdrawal or conversion cost. Also check the exact pair and settlement asset.
Takeaway: ask what quantity can execute at the displayed price, and calculate the complete route from entry to exit.
Further reading
Provider documentation explains particular designs. It is not a product endorsement.