TL;DR
- DEX aggregators are tools that give traders access to various trading pools using a single dashboard.
- DEX aggregators were created specifically to solve the liquidity issue of DEX.
Introduction
In the world of Decentralized Finance (DeFi), there are new developments and innovations to enhance the user’s experience, and DEX aggregators are one of them. With DEX at its foundation, DEX aggregator helps to improve the user’s experience by acting as a search engine for the DeFi world.
In this article, we will take a look into DEX aggregators, its history and how it can benefit crypto users.
What is a DEX aggregator?
What is DEX?
A decentralized exchange (DEX) is a peer-to-peer (P2P) market that functions in a similar manner to that of centralized exchanges (CEXs) but without the need for a middleman.
What is a DEX aggregator?
DEX aggregator is a platform that combines data about the exchange rates from many exchanges to let users perform split trades to achieve the best price of a swap.
DEX aggregators can be considered as the search engine for DeFi trading. They use complicated algorithms to help users find the best pricing option in a vast liquidity source in DeFi.
What are the differences between DEXs and DEX Aggregators?
Because DEX aggregator is a type of DEX and that they are both based on blockchain technology, they have a lot of common features. The two platforms both support trading and investing, however, their way of facilitating trade and investing are unique.
The only real distinction between DEX aggregators and DEXs is that DEXs do not give customers the opportunity to liquidate, whereas DEX aggregators are created particularly to address this problem. DEX aggregator gives traders the ability to access liquidity from numerous DEXs. DEXs aggregators provide a large pool of liquidity for anyone who want to trade large sum of tokens, usually at the best possible rate.
Notable examples of DEX aggregators
1Inch
1Inch is a DEX aggregator designed to scan decentralized exchanges to find the best possible pricing for traders. It provides access to over 116 sources on the Ethereum ecosystem, Binance Smart Chain and Polygon Network.
1Inch was developed by Sergej Kunz and Anton Bukov in 2019 and has handled over $300 million in daily trading volumes from 300,000 users till today. 1Inch is considered to be one of the most active DEX aggregators in 2021.
Open Ocean
Open Ocean is the first DeFi and CeFi aggregator. The platform is believed to be one of the most complete aggregators on the market because it combines data from both decentralized and centralized exchanges, supporting different blockchains such as Ethereum, Binance Smart Chain, Ontology, TRON,…
The platform offers 143 pairs of crypto tokens.
ParaSwap
ParaSwap is a DEX aggregator on the Ethereum blockchain. It compares liquidity from 20 decentralized exchanges and combines all the functions into a single portal for the best optimal user convenience.
The exchange offers 144 pairs of crypto tokens.
Uniswap
Uniswap is one of the most well-known DEXs in the crypto sector. The platform was developed in 2018 by Hayden Adams. Uniswap had processed over $10 billion in weekly trading volume as ò April 2021, making it one of the largest decentralized exchanges operating on the Ethereum blockchain.
The site provides over 50 liquidity pools, over 285 coins, and 350 marketplaces to its customers.
Matcha
Matcha is a DEX aggregator enabling people to trade at the best possible price. Matcha was developed by Ox, the brain behind Ox Protocol, in 2019.
Because Matcha went through the many testing by Ox Labs, and uses the Ox v4 smart contracts audited by ConsenSys Diligence – a top blockchain company, it is safe to say that Matcha is a relatively secure platform for crypto users, even beginners.
The platform currently supports Ethereum, Binance Smart Chain and Polygon.
Advantages of DEX aggregators
Liquidity
Decentralized exchanges are vulnerable to risks due to liquidity since there are not enough traders making orders. But thanks to DEX aggregators, traders have access to a deeper pool of liquidity for traders that want to trade large amounts of tokens.
DEX aggregators can work together as a group of exchanges to conduct transactions involving the exchange of one crypto token for another. If the users want to convert a large position in a specific token into stablecoin, they are more likely to source the liquidity they need without creating too much slippage thanks to DEX aggregators.
Diverse Trading Pairs
Crypto trading today is not just about the big names like BTC and ETH, there are hundreds of thousands of coins and tokens available in the market. Traders have to do a lot of research to find the appropriate crypto investment portfolio.
DEX aggregators help make the problem easiest with the interface that allows even the beginners to dive into the crypto sector with the ability to combine multiple sources and present them together.
Self-custody
Just like DEXs, DEX aggregators do not have the authority to control the user’s funds and assets. Thanks to the “self-custody” nature of DEX aggregators, privacy and anonymity become the founding principles that crypto enthusiasts hold dear.
Cheap gas fees
High gas fees continue to be one of the top issues facing the crypto industry. From between 2021 to 2022, the average Ethereum gas fee was approximately $40, according to BitInfoCharts.
This is where DEX aggregators come to help. DEX aggregators provide users with the cheapest trade rates possible and further reduce the gas fees.
How to build a DEX aggregator?
Since DEX aggregators bring many benefits to crypto user’s experience, many people have been learning and trying to develop their own DEX aggregators. One can create their own DEX aggregator by using a package of source code called a crypto clone script.
For example, 1Inch is one of the pioneers and most well-known DEX aggregators with its outstanding and incredible features, crypto users can learn and start a platform like 1Inch with 1Inch DEX clone aggregator script.
Anyone can create a DEX aggregator that is 100% identical to the original in terms of features, trading pairings, tokens, and more. Then, customers can alter a variety of features, including the trading and fee options to match their own requirements.
Final thoughts
The innovation that has fostered decentralized exchanges has given rise to DEX aggregators. Traders obviously want to be able to trade their preferred assets across chains in the expanding DeFi market, where thousands of tokens are issued across numerous chains. DEX aggregators are the integration that offers users the seamless cross-chain token swaps they’ve been waiting for.
