Liquidity has always been a central concern for financial markets and without it trade orders risk having low throughput and poor user experience. It is a tedious process to manually search through the numerous DEX’s and even more CEX’s in order to get the best rates as many have different prices for the same asset.
While fragmented, we've seen a huge increase in the available liquidity with the rise of AMMs and liquidity protocols. Billions of dollars worth assets are locked across different L1s, L2s and protocols within these layers, yet the composition is still somewhat lopsided.
Liquidity aggregation protocols such as 1inch and 0x offer the ability to aggregate liquidity across different protocols. Smartdex leverages the 0x API, which provides a strikingly high order throughput that facilitates a lightning quick trading experience.
The process of liquidity aggregation is relatively simple and involves plugging into existing liquidity sources across a network. As a result, this enables users to trade across different liquidity sources at the best price.
Liquidity aggregation also helps to oppose market manipulators due to the various exchange options the user can choose from. When high volumes of trading are involved this helps to alleviate risk and minimize slippage.
Instead of competing with other exchanges, liquidity aggregation helps unite them through their order pools. In the case of Smartdex 2.0, having a strong infrastructure already with 0x (The Backbone) built into our design, we were able to focus on moving towards our mission of multi-chain liquidity aggregation.
At the moment 0x supports Polygon, ETH, Fantom, Avalanche, and BSC. With to our integration, Smartdex 2.0 will now be able to incorporate these chains into our ecosystem. We are excited to soon be adding Cardano (with Elrond, and Conflux in the works as well) to our list of compatible blockchains.
Meanwhile, the sourcing of liquidity through 0x will facilitate a robust mix of highly liquid platforms such as Uniswap, Sushiswap, Balancer, Bancor, Quickswap, Dfyn and more.
In our next blog post for the Smartdex 2.0 series we will explore how we are doing this with cross chain bridge aggregation acting as the unifier.
As always we will keep you posted.
Have fun and happy trading with Autonio!