Sushi noted that its team had been working secretly on building an aggregation router for a while now as it is part of the platform’s bigger vision for 2023.
Open-source Decentralized Exchange (DEX) SushiSwap has introduced a new aggregator as it makes its first foray into the aggregation business.
With this DEX aggregator, SushiSwap customers are allowed to obtain the best prices when trading on the platform without further or additional procedures. In order words, customers will be offered optimum pricing while also exposed to a large range of assets available for trading.
It would also serve to manage the range of liquidity that liquidity providers (LPs) can provide, thereby, increasing the transaction fees they can earn.
Noteworthy, liquidity has been the problem of many DEX seeing that it is most times unstable. For this reason, it is projected that there will be an increased demand for the DEX aggregator. These DEX aggregators often act as liquidity aggregators from various sources like traditional Automated Market Makers (AMMs) or Centralized Exchanges (CEXs).
DEX aggregators are financial protocols that help unify liquidity across different exchanges on a given chain. It then employs a complex algorithm to establish the cheapest route based on several factors for a user’s swap in the available platforms. Notably, aggregators are very popular in the Decentralized Finance (DeFi) sector due to this single, unified interface that it offers for communication amongst crypto exchanges.
In addition, the DEX aggregator aims to optimize the price slippage and the transaction fee via a mechanism. At the end of the day, it makes it more convenient for users to trade. The fact that it provides users with a wide range of assets, there is every possibility that it would attract more users to the platform.
Consequently, this would lead to increased swap fees for liquidity providers and attract more liquidity overall in a positive feedback cycle.
Sushi DEX Aggregator Holds Numerous Benefits for LPs
Sushi noted that its team had been working secretly on building an aggregation router for a while now as it is part of the platform’s bigger vision for 2023.
“The goal is to deliver optimal pricing to our users while also opening up the sheer amount of assets our users can trade with and can provide liquidity for LPs, increasing the number of swap fees they can accrue,” the blog post explained.
The Sushi protocol is focused on becoming the hub of swaps in DeFi. Sushi mentioned that the most significant and essential benefit of its aggregator is the fact that it is “biased”, hence routing many of the trades through Sushi and allowing for exposure to a plethora of tokens that were not available in the Sushi UI before.
Earlier this year, the DEX platform launched a new Perpetual contract futures exchange on the Sei Network. For Sei Network, the partnership is another strategy to generate a new revenue stream for the protocol as well as grow its influence.
next