How does DEX aggregator implement aggregation?
2023-04-10 07:54:46 UTC
DEX aggregators use various techniques to implement aggregation across multiple decentralized exchanges (DEXs). The implementation can vary depending on the aggregator's architecture and design, but some common techniques include:
- Smart contract routing: Some DEX aggregators, like 1inch, use smart contract routing to split trades across multiple DEXs. They use an algorithm that determines the optimal route to achieve the best price and lowest slippage for the user's trade.
- Order book aggregation: Some DEX aggregators, like DeversiFi, aggregate order books from multiple DEXs to provide users with the best prices and deepest liquidity. They use advanced algorithms to analyze the order books and determine the best prices for each trade.
- API integration: Some DEX aggregators, like DEX.AG and Paraswap, integrate with multiple DEXs' APIs to retrieve pricing and liquidity information. They use this information to provide users with the best prices and lowest slippage for their trades.
- Liquidity pool aggregation: Some DEX aggregators, like Matcha, aggregate liquidity pools from multiple DEXs to provide users with improved liquidity and price discovery. They use an algorithm to determine the best liquidity pool for each trade, which can result in better prices and lower slippage.
Overall, DEX aggregators use a combination of smart contract routing, order book aggregation, API integration, and liquidity pool aggregation to implement aggregation across multiple DEXs. These techniques help DEX aggregators provide users with the best possible prices, liquidity, and trading experience.