A DEX aggregator is a platform that gathers trades, lending, or yield opportunities from many other decentralized finance projects (mainly other DEXes). Here’s my quick video introducing them:
Some aggregators are built as smart contracts (running on-chain) and others are off-chain programs run by a central company or group of people. (That is a vital thing to know when studying the ones to use.)
I also created a list of the top DEX aggregators here, so check it out. (Yep, I aggregated a list of aggregators!)
The first aggregators compiled trades from decentralized exchanges on the most popular blockchains, mainly ones that are EVM compatible. Today, these platforms bring in trades from lesser known chains and even centralized exchanges (CEXs).
The types of assets that show up in a DEX aggregator are also expanding. It’s not uncommon to see NFTs or tokenized assets such as stocks, bonds, and funds listed. It’s clear that aggregators are growing into important trade hubs for cross-chain DeFi interoperability.
Features and Advantages of Aggregators
Each DEX aggregator provides different functions and lists trades from different sources. Here are some of the most common benefits from their use. (These might not apply to all of them.)
- Splitting up of Trades: a swap can be chopped into smaller ones, which is pretty amazing. This can provide a better price with lower slippage and fees.
- Pathfinding: this feature can automatically find the best route for a trade. It hops between various trades around DeFi to get the trader a better price, fee, and slippage.
- Faster for Human Traders: we are too slow to check prices and switch between various Dexes to find good deals. This aggregator software lets us see trades from many places in one interface.
- Many Hardware Wallets are Supported: many DEX aggregators accept the most popular wallets out there. There is usually a “connect” button at the top to see the wallets allowed.
To me, DEX aggregators are a big deal for cryptocurrency trading. They allow for liquidity pools and asset trades to happen across blockchains more frequently. These are the early stages of the DeFi world becoming one big liquidity pool that can be traded from thousands of different sites, apps, and DApps. (That’s a little futurist take of mine.)
As aggregators grow in popularity, they will encompass larger pools of liquidity, which is a great thing for crypto traders. They are the DEX search engines for finding you the best prices on crypto trades.
These cross-chain / interoperable apps are in their infancy. There have been many bridge hacks and they may be vulnerable for a while. Protect yourself by researching each aggregator before you consider using one.
Do some searching for hacks or to see if funds have been lost due to trades not going through properly. Use Google and social media to do your own research. Good luck out there!
