DEX Aggregator - is a blockchain-based service that gives the opportunity for cryptocurrency traders to gain profit from several financial tools in a single interface.
Let's find out DEX Aggregator meaning, definition in crypto, what is DEX Aggregator, and all other detailed facts. In general, cryptocurrency exchanges can be put into two distinct categories, either centralized or decentralized. DEX aggregators function as a centralized search engine for the prices and liquidity provided by decentralized exchanges (DEXs). DEX aggregators have become a wanted service as cryptocurrencies have gone mainstream and the use of decentralized exchanges has increased. DEX Aggregators are among the latest advancement in the burgeoning DeFi market, providing traders with access to deep liquidity and better pricing.
The simplest way to illustrate a DEX aggregator works is to put it next to a search engine. Services such as Google Flights provide aggregated data from several airlines, and users have the ability to choose the exact deal that works the best for them. DEX aggregators operate in a similar manner. They collect data from a variety of decentralized exchanges and allow divided trades in order to deliver the best pricing available. Furthermore, DEX aggregators do several computations and provide customers with the opportunity to make split transactions in order to obtain the best available swap value. In essence, crypto traders are unable to achieve this outcome because DEX aggregators do incredibly complex computations in a couple of seconds.
Decentralized exchanges provide constantly changing pricing, and it is not that simple to come across the most fitting deal for the set users are looking into. In addition, crypto investors are beginning to choose DEXs more often, because they provide exceptional security and a better fit with the essential features of a cryptocurrency. Nevertheless, with the increasing adaptability and popularity of crypto, DEXs overload the market even more, and investors usually have a hard time selecting the best pricing and liquidity.
DEX aggregators are quite handy in this situation. Although investors may attempt to use several exchanges, DEX aggregators depend on sophisticated algorithms to consider various aspects while picking the best potential supplier for a specific token swap.
DEX is an abbreviation for decentralized exchange, which is a cryptocurrency trading platform based on blockchain technology that enables users to keep control of their funds while exchanging one token for another.
Decentralized exchanges (DEXs) offer greater privacy and security than their centralized counterparts, which has resulted in a significant rise in activity in recent years. The most notable decentralized trading platform is Uniswap, which works on the Ethereum network that enables crypto traders to convert ERC20 tokens directly through their Ethereum wallets via a user-friendly web-based interface.
The problem with decentralized exchanges is that most of them lack liquidity, especially for smaller tokens, finding it challenging to enter and exit larger positions without significant slippage. DEX aggregators were created to address this issue.
DEX aggregators are financial protocols that enable cryptocurrency traders to access a range of trading pools from a single dashboard.
For example, if you want to buy LCX on the Ethereum blockchain using ETH, you can use DeFi terminal Aka fire salamander, an Ethereum-based DEX aggregator.
You enter the cryptocurrency trading pair you would like to convert into the trading application. The liquidity aggregator then uncovers the best possible price for you to execute your order across all available platforms.
While the currently available DEX aggregators differ in some ways, they all have a user-friendly interface that needs you to connect your wallet and perform a single trade on a web-based application.
DEX aggregators, also recognized as liquidity aggregators, offer a number of advantages that have made them very famous among active traders. In fact, DEX aggregators have become so popular that they accounted for roughly 20% of decentralized trading volumes by mid-2020.
So, let ’s take a look at the advantages of liquidity aggregators.
1. DEX aggregators offer a larger pool of liquidity to traders who wish to trade huge amounts of digital tokens.
2. If you want to convert a significant position in a currently issued token into a stable coin, for instance, due to a lack of liquidity, you may find it difficult to do so on just one decentralized exchange. Nevertheless, if you utilize a liquidity aggregator, you are much more likely to find the liquidity you require to exit your token position without incurring excessive slippage.
3. A DEX aggregator will typically provide a better execution price than a single DEX. Aggregators are designed to help traders fill trades at the highest possible level across a variety of liquidity pools. As a result, for price-sensitive investors or traders, using a liquidity aggregator rather than a single decentralized trading platform makes sense.
4. DEX aggregators, like “traditionnel” decentralized exchanges, add a layer of privacy to crypto trading that centralized exchanges do not provide.
5. In contrast to centralized exchanges, which typically require users to complete a KYC onboarding procedure, everyone with a crypto wallet and an internet connection can sign up onto a liquidity aggregator online and exchange one digital asset for another. There will be no need for ID verification, and no paperwork will be required.
6. DEX aggregators are normally non-custodial exchange platforms, which also means traders retain complete control over their funds.
7. Unlike centralized exchanges, which require you to deposit coins and thus give up your private keys for the duration of their storage on the platform, liquidity aggregators permit you to trade directly from and to your crypto wallet.
8. Finally, liquidity aggregators enhance the decentralized trading experience by providing user-friendly dashboards where a few clicks are all that is required to trade millions of digital tokens in seconds.
Given the long list of advantages that DEX aggregators provide, it should be unsurprising that several leading projects in this space have recently secured millions in funding, and that new market entrants are showing up on the scene.
A decentralized exchange (DEX) is a cryptocurrency exchange that operates without the involvement of a central authority or third party. As a result, a user retains full control of their funds stored or traded on DEXs, which offer a higher degree of security than centralized exchanges (CEXs). Decentralized exchanges rest on the Ethereum blockchain and require Ethereum smart contracts to operate. On the other hand, centralized exchanges are run by a third party, which collects trading fees.
CEXs do not sit entirely on the blockchain. Because CEXs are not on the blockchain, they are faster, and it is possible to transact fiat as well as crypto.
DEX aggregators source liquidity from different DEXs and thus offer users better token swap rates than they could get on any single DEX. DEX aggregators have the ability to optimize slippage, swap fees and token prices which, when done right, offer a better rate for users.
For instance, a swap deal split between several DEXs can get a user an overall better price than a swap on any single exchange.
A DEX aggregator ’s main task is to offer a user better swap rates than any specific DEX can offer and to do that in the shortest possible time. Other major tasks are protecting users from price impact and reducing the probability of failed transactions.
DEXs are generally interested in DEX aggregator integrations, as they can attract more users and volume. Recent data shows that high notional traders are increasingly using DEX aggregators, while retail users still choose to access DEXs directly.
DEX aggregators are a somewhat newer concept that arose from the rise in DEXs. They have become more important to users in the recent DeFi boom as more and more users prioritize better prices on their trades.
Liquidity aggregator refers to technology that allows participants to simultaneously obtain streamed prices from several liquidity providers/pools.
Computer algorithms allow customization of the price streams for both the liquidity provider and the receiving counterparty.
Most existing DEXs (decentralized exchanges) suffer from the twin problems of a lack of liquidity and high slippage. Those problems have only grown as the number of assets and chains continue to increase. What this means in practice is that users are still forced to configure and connect to various DEXs to buy assets. Those wishing to trade must then use inefficient bridges to move assets from one DEX to another. The whole process is time consuming, inefficient and expensive, and it lacks security.
Some decentralized solutions to liquidity problems have emerged, but they don ’t fully resolve the underlying issue, because they can only aggregate liquidity from one single chain at a time. However, the Archie Aggregator DEX, powered by Fusion DCRM technology, aggregates liquidity from more than 20 active DEXs on the market (including the 1inch aggregator) across nine chains for any given transaction, with more DEXs and chains being added all the time.
But Archie Aggregator doesn ’t only aggregate liquidity, it also focuses on pricing. The cross-chain swap pathfinder algorithm helps users split orders not only between DEXs, but also across chains to find the best pricing available. Further, any occurring slippage is updated in real time to ensure the best deals at any given moment.
All this means that users get the best prices for their target pair swaps with one tap and minimal transaction time.
So how does it work in real life? The primary goal of the Archie Aggregator cross-chain DEX aggregator is to provide traders with the best exchange rates compared with any other DEX or liquidity aggregation platform with a user-friendly process and minimal transaction times.
Take the use case of swapping USDC for ETH. What happens in the back end?
1. The Archie Aggregator DEX algorithm searches the local database containing all DEXs integrated with the supported chains for the USDC and ETH pair.
2. Archie Aggregator finds the DEXs with the lowest slippage rates for the specific pair and determines the best chain(s) to transfer the assets to.
3. The assets are automatically sent to the target chain(s) and the predetermined amount of USDC is split among the DEXs, and then swapped.
4. The user receives the maximum amount of ETH they could possibly get for the USDC in a couple of minutes, outranking any other potential DEX involved in the operation.