A Deep Dive into the Future of Onchain Liquidity Routing

The onchain market's fragmentation, with liquidity spread across thousands of pools and numerous DEX venues on multiple networks, necessitates sophisticated solutions for efficient trading. DEX aggregators have emerged to address this complexity, acting as the default access layer for users by scanning the market and presenting optimal trading routes. Mechanically, aggregators utilize a routing engine and a transaction protection layer. The routing engine handles pathfinding across potential swap routes, including multi-hop options, and order splitting to minimize price impact. The transaction protection layer safeguards the trade execution from slippage, particularly from MEV-driven attacks. As aggregators mature, they are shifting from merely choosing routes to orchestrating execution, expanding their role to outcome delivery. The future trend points towards delegated execution, where users express trading intent and a competitive marketplace of solvers optimizes liquidity sourcing and execution risk management.

(Source：The Block)