What are DEX aggregators? How does it help me get better token swap rates?
Exchanges have played a critical role in buying and selling crypto, even since Bitcoin’s early days. The DeFi space has seen waves of new investment and growth as users explore beyond centralised trading. Decentralised exchanges (DEXs) are a key innovation driving growth.
From April 2021 to April 2022, DeFi users sent $224 billion in on-chain value to DEXs — outgrowing centralised exchanges such as Coinbase. A growing number of tools and protocols have emerged to make DeFi trading better — including DEX aggregators such as Atlas DEX.
Understanding decentralised exchanges
Before learning more about DEX aggregators, let’s briefly touch on DEXs.
- Decentralised applications (Dapps) that allow for peer-to-peer swaps of cryptocurrency or digital tokens. Instead of depositing into an exchange, you can trade without the need for a central authority controlling the swap or trade.
- This is possible as Dapps are on the blockchain and trades by users are executed through smart contracts. Read here to find out how smart contracts allow for the decentralisation of applications.
What issues do DEX aggregators solve?
As DEXs grow in number, there is a need to manually search a DEX for the best trading price and liquidity that will deliver an optimised trade. DEX aggregators are an efficient algorithmic solution that checks for the best token swap rates across many DEXs, providing the best token swap rate there is in the market.
This solves two key issues:
- Liquidity Fragmentation — Fragmented liquidity is a key issue in DeFi, meaning that the amount of liquidity (amount of buy and sell trades) is split on different DEXs. Aggregators allow users to tap into the deep liquidity pools of multiple DEXs. One such example is when Atlas DEX splits large trades and partially fulfils them on different exchanges to utilise the different liquidity pools.
- Slippage — Slippage refers to the difference between the expected price of a trade and the price at which the trade is executed. Slippage can occur when a large order is executed but there isn’t enough volume in the exchange, which causes the executed price to increase. Aggregators actively source and route orders to exchanges with the deepest liquidity to reduce the impact of slippage.
DEX Aggregators (also aptly called Liquidity Aggregators) create a simple, user-centric interface to allow users to have a seamless trading experience. Atlas DEX is a key DEX Aggregator that seeks the best trading price and execution for both retail and institutional users. Whether you trade with size or not, Atlas Dex provides the best swap rates.
On top of being a DEX aggregator, Atlas DEX is also cross-chain. Meaning that you can even make token swaps from one chain to another. E.g USDC from Ethereum chain to Pancake Token on the Binance chain.
What mechanisms allow for cross-chain interoperability?
DEX aggregators take advantage of interoperability in DeFi to enable seamless and fast swaps. This is possible through the use of decentralised bridges, which allows tokens on one chain to be moved to a different chain. Users interact with smart contracts within the bridges in order to move their tokens over.
- Atlas DEX is partnered with Wormhole, a generic message-passing protocol that connects to more than ten blockchains. Through leveraging the Portal bridge, Atlas enables permissionless token trades across multiple supported chains.
Benefits of DEX Aggregators for users — including better token prices
Through a DEX Aggregator like Atlas Dex, users can access many key benefits:
- Aggregated Liquidity — Aggregators enable seamless and rapid swaps between different chains through sourcing liquidity across multiple DEXs, DEX Aggregators and automated market makers (AMM). Sourcing liquidity allows greater access to funds, so trades can be executed better with small spreads.
- Minimal Slippage — The process of aggregating between many liquidity pools reduces the probability of excessive slippage. This allows users to easily manage slippage through a simple interface.
- Seamless Cross-chain swaps — Traders can access and trade across multiple blockchains — Atlas DEX enables chain-to-chain swaps from Ethereum, Solana, Avalanche, Binance Chain, Fantom and many more!
- Complete custody of funds — Traders maintain complete custody of their funds and privacy — a key benefit of DeFi!
- Intelligent execution of trades — For large orders, Atlas DEX will be able to find liquidity for the token pair even on different chains.
E.g If you want to exchange Ethereum to USDC on the Ethereum network, and there isn’t sufficient liquidity on the ETH-USDC pair on ETH network, we might rely on the liquidity on other networks such as Binance, Fantom, Polygon, and all our supported chains.)
Use cases of a Cross-Chain DEX aggregator
Seamless and efficient cross-chain swaps give users the flexibility to explore new market opportunities and unlock value across multiple chains. This could include;
- Bridging tokens over from one chain to another in order to invest or participate in a new project;
- Cross-chain staking and liquidity pooling;
- Whales face complexities and inefficiencies when placing large orders and order-splitting — often resulting in high gas fees and slippage. Cross-chain DEX aggregators allow whales to use an intelligent algorithm to split trades.
As the challenges and benefits of cross-chain aggregation evolve, the Atlas DEX team continues to develop new product innovations to bring greater value to the DeFi space and our community.
This includes expanding seamless cross-chain swaps to support the 1:1 exchange of stablecoins across any of our supported chains. This development is scheduled for Q4 alongside other product offerings — explore the Atlas DEX roadmap for more exciting developments ahead.
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💥 | Check out our website: Atlas DEX