Aggregators for DEXs: What the Heck Are They?
As a DeFi trader, you’re oftentimes faced with the task of finding the best swap prices and lowest slippage on DEXs. That could be very frustrating, time and resource consuming as there are dozens of DEXs to choose from. What would make this easier would be some sort of tool that gives traders info on which DEXs offer the best swap rates, lowest slippage and highest liquidity. That’s where a DEX aggregator comes in.
What is a DEX Aggregator?
DEX aggregators allow traders to get information on liquidity and swap rates from various DEXs or liquidity sources on one dashboard. This way, traders can get competitive prices from these different sources and choose the best option to trade in just a few clicks.
Think of how you use the Google Alert tool to aggregate information on say DeFi news. Links to a set of articles on related topics are automatically sent to your mailbox. DeFi liquidity aggregators work in a similar pattern. They collect data from various DEXs and liquidity sources to display them on one dashboard for the trader to make better informed decisions on the best rates. Think of DEX aggregators as the search engine for standalone DEXs and liquidity pools.
Aggregators identify liquidity from these various sources to give the trader the best rates available and minimum slippage. Some of the aggregators currently in the DeFi market include Matcha.xyz, 1inch Swap, ParaSwap, DEX.AG and a host of others.
Why do we need them?
For traders to get the best of token swap rates, prices and most affordable fees available, having a single platform that provides information on various DEXs is of huge relevance. Checking for prices manually across each DEX can be frustrating and certainly not efficient.
In terms of liquidity and user experience, DEX aggregators contribute to the improvement of the overall DeFi ecosystem. By allowing traders to access liquidity from different DEXs and services from one place, access to the best swap rates are possible. This makes trading and swaps easier, and provides the trader with more choices.
They can compile data from numerous blockchains instead of just one, which explains the need for cross-chain liquidity aggregation. Take for example 1inch who aggregates liquidity from both Ethereum and Binance Smart Chain.
While aggregators are still developing in DeFi, their relevance cannot be overemphasized. This is why the DeFi sector will experience the creation of more aggregators in the next foreseeable future, and increase the demand for cross-chain solutions.
Aggregators give new definitions to advanced user experience, accessibility and simplicity. As a crypto derivatives (CDs) DEX supporting the growth of cross-chain liquidity, CDzExchange is exploring DEX aggregators as one pillar in our tech development.