One of the most important new tools to master in DeFi is trading on decentralized exchanges (DEXs) on Ethereum. For those trading Ethereum-powered tokens (ERC20 tokens), it’s important that we can find the best trading rates on a growing list of liquidity sources in DeFi. It’s very similar to finding the best flight…
One of the most important new tools to master in DeFi is trading on decentralized exchanges (DEXs) on Ethereum. For those trading Ethereum-powered tokens (ERC20 tokens), it’s important that we can find the best trading rates on a growing list of liquidity sources in DeFi. It’s very similar to finding the best flight fare. Do you check each airline website one by one, or do you rely on aggregators or search engines like Expedia or Google Flights to guide you to the best deals?
While many of us have used popular AMMs like Uniswap, Balancer, Curve, and many others, DEX aggregators can be more convenient as they route liquidity from all these liquidity sources and more. The DEX aggregator aims to provide a better rate with less slippage, whether it comes from Uniswap or Kyber, Balancer, or Sushiswap.
Think of a DEX aggregator as the search engine for your DeFi trading. DEX aggregators can also spread your trade across different liquidity sources to improve pricing. It’s not just about where to trade in DeFi anymore. Due to algorithmic order routing, you’ll likely never be able to find better rates by searching on your own. You’ll be competing against algorithms that are continually being refined to optimize trading routes, rates, slippage, and in the context of major liquidity swings in real-time.
If you’re interested in trying out a DEX aggregator, here are a few of them, in no particular order:
- 1inch Exchange (with the highest trading volume)
- ParaSwap
- Matcha by 0x
- Dex.ag
In the future, you will likely see DEX aggregators integrated into every DeFi wallet and product as the DEX aggregator API becomes the common engine between different DeFi applications. Some examples of this are already: MetaMask implements a swap that uses the 0x API that also powers the Matcha.xyz DEX aggregator. Zapper Exchange is also powered by the same API as Matcha.xyz. If one uses Matcha to trade and Zapper to track their DeFi portfolio, they might as well use Zapper Exchange since it is just Matcha reincarnated.
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