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DEFI Aggregators Bringing It All Together

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@chekohler
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Hey Jessinvestors

The world of DeFi is still very much in its formative stages and is still fragmented. There are DeFi platforms on different chains like Ethereum, Binance Smart Chain, EOS, TRON and more; the issue with this is that assets cannot be used as effectively as they should be, especially now that assets are moving across chains.

To make it even more complicated is the fact that on each chain, there are several DeFi services with their own protocols, liquidity pools and native tokens. Every day someone new spins up a clone contract promising high returns.

I am sure that in the bear market, where liquidity is scarce, we'll see many of these DeFi platforms implode, but it doesn't solve the problem of fragmentation.

Many DEFI users tend to use the platform they're staking with or providing liquidity to do their trading, but it doesn't mean they are making the most effective trades. Since trades are made on-chain and liquidity in various pairs can be an issue depending on the size of the buy or sell, there can be more slippage.

If only there were a way to check other exchanges that also have these pairs and see which one can offer me the best exchange.

Well, you can with the help of DEX aggregators.

What Aggregators offer?

Aggregators take your purchase, scan different dex's, liquidity pools and protocols and then offer you the best path to make the trade.

If you look at the screenshot below, you'll see me setting up a swap for USDT for USDC on the Binance Smart chain via 1inch. The DEX aggregator then looks at my purchase and provides me with the exchanges, the slippage and the best path to purchase the asset I want.

1inch trade options

If you’re interested in trying a DEX aggregator, a few of them:

  • 1inch Exchange (with the highest trade volume)
  • ParaSwap
  • Matcha by 0x
  • Dex.ag

I think this is only the start, and there will be plenty of aggregators that will look not only to secure Eth and its various side-chains but go cross-chain too.

Aggregators keep market makers competitive

I realise it still requires people to use these services to see their value, but they do offer you more information to make better trade choices. Remember, with DEX"s you're making trades on-chain, and with chains like ETH and BSC, they charge you for failed transactions, so errors tend to punish you.

This gives you even more reason to ensure you use the most efficient path when you do make trades.

I think this is only the beginning, and as more DEX's come on board, more protocols connected, more assets move across chains. We'll see these platforms become more popular and vital in ensuring your trades are as efficient as possible.

This can also help reduce the load of on-chain trades as trades would be executed on the best path, which could be a side chain and use resources more efficiently.

Have your say

What do you good people of HIVE think?

So have at it, my Jessies! If you don't have something to comment, "I am a Jessie."

Let's connect

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