DEX aggregator
A DEX aggregator is a service that searches several decentralized exchanges for a route and price for a trade, and can split one trade across them. SODAX can sit alongside one: it coordinates the whole cross-network trade, which completes as requested or reverts and returns the original assets.
What it refers to
A DEX aggregator is a service that searches several decentralized exchanges (DEXs) and liquidity pools for a route and price for a trade, then sends the trade along the route it picks. It can split one trade across several venues to reduce the price impact on any single one.
Most DEX aggregators work within one network. Some also offer cross-network routes by linking a transfer step and one or more trade steps across networks.
Why this concept exists
Liquidity for the same pair of assets is spread across many venues, and each quotes a different price at any given moment. Checking them one by one is slow and error prone, so an aggregator compares them and routes the trade on behalf of the user or the app.
What this changes for system design
An aggregator routes over liquidity that venues already provide, so it can only reach an asset where some venue already quotes it. When a cross-network route is stitched together step by step and one step fails, the user can be left holding a token on a network they did not ask for.
SODAX coordinates the whole action instead, and it can sit alongside an aggregator rather than replace it. Apps that call the SODAX API get a cross-network trade built and settled as one action: SODAX routes, quotes and settles, a permissioned solver within the SODAX system performs the fill, and the trade completes as requested or reverts and returns the original assets, with no mid-route substitution of the destination token. Fills draw on the SODAX Liquidity Inventory together with addressable liquidity, the local DEX, aggregator and AMM liquidity on each network.
An aggregator can also call the SODAX API itself, as a Venue Partner, to offer cross-network trades inside its own product.
Related terms
- Addressable liquidity: aggregator liquidity SODAX can reach
- Cross-chain swap: the trade coordinated as one action
- Venue Partner: aggregators that call the SODAX API
- Liquidity fragmentation: the problem aggregators address
- Slippage: the price gap routing tries to limit
- Recoverability: completes or reverts