3 DEX protocols can help you to save your hard-earned money.
An introduction to DEX aggregators.
Before knowing about the 3 DEX protocols, let us get an understanding of DEX aggregators.
So what are DEX aggregators?
- DEX aggregators look for the most cost-effective transactional routes by pooling liquidity from different DEXs.
- By routing a single transaction across multiple liquidity pools, traders making large trades can take advantage of gas savings and minimize the cost of price impacts due to low liquidity.
Let’s see the 3 DEX Aggregator Protocols 👇👇.
1) 1inch Network
- 1inch Network is a DEX aggregator solution that searches for cheaper rates across multiple liquidity sources.
- The initial protocol incorporates the Pathfinder algorithm which looks for optimal paths among different markets.
- Since its inception on the Ethereum network, 1inch has expanded to support the Binance Smart Chain and Polygon networks.
- 1inch has two native tokens. One is a gas token (CHI) and the other is a governance token (1inch).
- CHI is a gas token that takes advantage of the Ethereum storage refund. Gas tokens help smart contracts erase unnecessary storage during the transaction fees and reduce gas fees.
- Holders of 1inch allow the community to vote for the specific protocol settings under the DAO model. The governance model enables stakers to control two main aspects:-
- Pool governance-governs specific parameters for each pool, such as the swap fee, the price impact fee, and the decay period.
- Factory governance- governs general parameters for all pools such as the default swap fee, the default impact fee, the default decay period, and the governance reward.
- Other notable features include limit orders and the option to select Pathfinder’s routing process and choose between maximum returns or minimizing gas costs.
- Matcha is a decentralized exchange (DEX) aggregator built by 0x Labs. It is powered by the 0x protocol, a protocol with various products, including a peer-to-peer network for sharing orders and their proprietary API.
- Matcha pulls data from the 0x API and efficiently routes orders across all the available liquidity sources.
- Unlike other DEX aggregators, Matcha utilizes a combination of on-chain and off-chain components throughout the trading experience.
- Quotes are generated off-chain via the 0x API to minimize gas cost before being utilized on-chain to execute orders. The 0x API finds the most cost-effective trading path (including gas cost) and can even split individual orders across multiple liquidity sources automatically if it’s better for the trader to do so.
- To date, there have been four major updates to 0x API. Through this version 4 update, Matcha users should expect more gas-efficient orders (up to 70% gas saved for quote orders and 10% for limit orders) and better overall prices.
- Paraswap was first developed in September 2019 and uses its routing algorithm, Hopper. Paraswap examines the rate for the given pair on all supported exchanges and displays the effective rate for each pair.
- Parswap implements several solutions to reduce gas usage across the platform such as implementing the REDUX gas token.
- Protocol revenue is generated through two main avenues:-
- The first is through third-party integrators, where if charge a fee on facilitated swaps, Paraswap takes a 15 % portion of the fee.
- The second is through positive slippage, where 50% is directed to the protocol, and the other 50% is shared back with the user.
- Paraswap currently has 48 sources of liquidity. This is supplemented by native pools, which are supplied by private market makers.
- Paraswap also recently integrated with the Binance Smart Chain network and Polygon Network.
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