What are exchange costs?
As part of the process of opening a new position, the tool trades DAI for ETH on OasisDEX in order for it to maintain a neutral position after the transaction is over. Since OasisDEX is a traditional order-book based exchange this means that the system will likely lose a little bit of capital to market makers as part of this trade. Exchange costs are how you, the user, can cover those losses so the system stays afloat.
- If you supply too little, then the transaction will fail because the system will not be able to fully recoup its trading losses.
- If you supply too much, then the excess will be refunded to you at the end of the transaction.
In general, you can usually use the minimum recommended exchange cost the UI presents and things will probably work. The worst case scenario is that your transaction will fail. You may want to increase it a little bit just in case the state of the system changes while you are waiting for your transaction to be mined. If you have excess ETH lying around that you are not leveraging, feel free to set exchange costs to as high as you are comfortable paying, since you will be refunded any excess.