Understanding Dex Aggregators

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Hi friends! how are you doing? Welcome to my blog. It's super good to have you back here. I trust you got value from my last post. I bring to you another interesting content, one that I believe you love as usual. In my previous post, we explored "Mempool", you can check out my blog to read through if you haven't.

Today, we would be looking at Dex Aggregator, what it is and how it works.. it's actually another topic of interest I felt like sharing with y'all. I hope you guys learn one or two things from this write-up.

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Introduction

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Have you ever gotten a bit stranded because of low liquidity on your Dex exchange platform or maybe you were in a fix not knowing if to proceed with a particular price quoted for an asset you would like to buy or sell because you weren't really comfortable with what your exchange platform seem to be giving you.

I know this and many more must have been you encounter at some point. How about me offering you a solution to solve these challenges. Anyways that is what we would be looking at today in this lesson. Let's get into it my friends.

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What is Dex Aggregator

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Dex Aggregator are crypto defi platforms that allows users access to liquidity across different decentralized platforms via a single platform. In other words, I mean user can through a single platform called Dex Aggregator access liquidity on every available Dex platform without having to visit these platforms separately.

Dex aggregators have made it possible to trade your cryptocurrencies and swap them across different Dex platform from a single platform as long as you're satisfied with the price you're given, you can go ahead with your unrestricted transaction on these aggregator platforms.

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This is the reason why Dex aggregators are also reffrered to as liquidity aggregators because it allows users to access liquidity from every available Dex exchange by it design. Aggregators are designed in such a way that they pool together liquidity from different Dex which then solves the problem of liquidity for user.

In a nutshell, aggregators helps users or traders get the best possible prices for their trade by helping them get liquidity from different Dex platforms making it easy for them to choose from a wide range of prices and services that best suits them.

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Brief History about Aggregators

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The history of Dex aggregators can be traced back to the period when Dex exchanges began to gain ground into the crypto world. They came as a very nice innovation when compared to the system on ground that seem to be centralized. They came giving user complete authority over their financial activities by encouraging peer-to-peer transaction via the use of smartcontract.

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But the downside to these Dex was that they were always low on liquidity despite their alluring advantages. This then gave birth to the need for an aggregator whose design is to bring together all of these Dex platform in a single platform for ease of access and to easily find liquidity for their asset. This would also help them get the best rate across various platforms.

The first aggregator that showed up was the 1inche Dex aggregator which started operation in 2019. It was after the success of 1inche that several others began to show up. Examples are DEX.AG, Matcha, AltFINS, Paraswap amongs other. What these aggregator do is to use some complex algorithm to search out liquidity + best of rate from all available Dex platforms

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How Dex Aggregators Work

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The user initiate a transaction by specifying the kind of transaction, whether to buy, sell etc. coupled with the quantities and price.

The Dex algorithm them checks out the request sent and begin a search to match the order. It also ensures it goes all out to get the best price for the user.

The aggregator also optimize the request to ensure that fees and slippage are moderate when trying to execute the trade across these platforms

The Dex aggregator then comes up with a real-time status of the transaction after finding a suitable match. This includes the fee, the anticipated time of execution and the current market price.
You can then proceed with your request.

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Bottom Line

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I believe by now you understand what a Dex aggregator is and how it functions.As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!

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^{Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.}

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Regards
@lhorgic♥️

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