What are DEX aggregators & how do they work?

If you’re interested in investing in cryptocurrency, you’ve probably heard about DEXs and CEXs. However, not everyone knows exactly what is the main difference between those exchanges, as well as what they’re for. We’re glad to inform you that in today’s article, we’ll tell you about DEX aggregators, the key difference between DEX and CEX, and how they can help us while making crypto operations. So let’s not waste time and get to the point.

What is a DEX?

Let’s start with the simplest question – what is a DEX aggregator? DEX (decentralized exchange) is an exchange, which is a crypto trading platform based on blockchain technology. Decentralized exchange, in contrast to a centralized exchange, allows users to control their funds independently while converting one token for another. Besides, they rest on the Ethereum blockchain, so it requires Ethereum smart contracts to operate.

Centralized exchanges, in turn, offer users a lower degree of security. However, on the other hand, they’re operated by a third party and don’t sit entirely on the blockchain. It means that CEXs are much faster, and it’s possible to transact both fiat and crypto.

Why do I need a DEX aggregation?

Actually, everything is straightforward – if you’d like to get the best and most effective price for a swap, it’s better to use a decentralized exchange aggregator. You’ll probably agree that manually checking isn’t so efficient, as well as takes lots of time and doesn’t allow you to use complex trading routes and paths. Thus, a DEX aggregator is the best way to save money thanks to its sophisticated algorithms.

Currently, such aggregators demonstrate an explosive growth that’s on par with DEX volume growth.

How do DEX aggregators work?

Crypto DEX aggregators provide liquidity from different DEXs, offering users the best token swap rates. It becomes possible thanks to their ability to optimize slippage, swap fees, and token prices. When everything is done properly, users receive what they’re looking for.

For instance, a swap deal split between several DEXs can give the user a better price in general than a swap on any separate exchange.

So, if we speak about the main tasks of the DEX aggregator, they’ll be the following:

Offer a user better swap rates than any specific DEX, and do it as soon as possible;
Protect users from price impact;
Decrease the likelihood of failed transactions.

Usually, DEXs are interested in DEX aggregator integrations since it’s a great chance to attract more users and volume. According to the recent data, high notional traders use decentralized exchange aggregators more and more often while retail users still prefer to access DEXs directly.

FAQ

Still, have some questions about decentralized exchange aggregators? If so, please take a look at our FAQs list below – there, you’ll find the answers to all of your remaining matters.

How does DEX aggregator work?

To get a deeper understanding of how DEX works, we’d like to share with you a perfect example – the Droidex aggregator, which provides its users the best rates in the shortest possible time. So if you’re going to swap tokens in the nearest future, we recommend you choose Droidex and use our small step-by-step guide to avoid any possible mistakes and make the operation properly on the first try.

First of all, you need to visit our official website, https://droidex.io/, and click “Start Swap”.

After that, select the network – let it be BSC.

Then, choose the first coin.

Again, choose the second one.

After you’ve chosen the coins, enter the number of tokens you want to exchange and click “Connect Wallet”.

Further, choose a suitable wallet for you, for example, MetaMask.

To make a swap, press the button “Swap”.

Finally, you can complete your operation – just tap “Confirm Swap”.

Congratulations! A new coin is already in your wallet!

What are the best DEX aggregators?

Before moving to the list of the best DEX aggregators, we’d like to share with you the background.

The first DEXs were too slow, it’s not a secret for everyone. Probably, you remember the company Bisq, which allowed users to find each other off-chain and make peer-to-peer transactions.

Later, in 2016, EtherDelta started to visualize a more futuristic DEX and use smart contracts to operate trading wallets in the traditional order-book model. However, such a model wasn’t compatible with Ethereum, didn’t have liquidity, and had a tough user experience.

In 2018, a new generation of cryptocurrency exchanges came forward – it had many features, starting from automated market makers and finishing with liquidity pools.

In 2021, DEXs became quite popular. So let’s take a closer look at the top 5 DEX aggregators at the moment:

dYdX,
PancakeSwap,
Swapzone,
SushiSwap,
1inch Liquidity Protocol.

What does a crypto aggregator do?

As we’ve already noted, the main aim of any crypto aggregator is to provide a user with better swap rates than any single DEX and do it as soon as possible. Besides, two equally important purposes are the following: protect users from price impact and decrease the likelihood of failed transactions.

Can you buy Bitcoin on a DEX?

Of course, you can. DEXs are usually considered cryptocurrency exchanges – places, where it’s possible to buy different cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Polygon (MATIC), and others.

However, the main difference between a traditional swap and a crypto swap is a bit blurred by the fact that stocks and other assets can be slightly “tokenized.” Great examples can be Tesla, PayPal, Amazon, and even centralized exchange Coinbase. So if you’re going to trade such assets, choose a DEX 24/7, where it’ll be possible.