Liquidity Aggregation: Advanced Router and Route Building
Dubai, UAE, 27th December 2023, The convenience and accessibility of its solutions have been a top priority for the Kinetex team. For the Liquidity Aggregation mode of the Kinetex dApp, the team has implemented advanced routing, among other features. It has significantly streamlined the swapping experience for users and, consequently, has enabled them to trade crypto assets in the most advantageous way possible.
Present Challenges & Kinetex Solution
The cryptocurrency market consists of numerous exchange platforms, each with its own distinct features, trading pairs, and commission structures. Such copiousness makes it quite tricky for crypto users to navigate through the DeFi universe and find solutions and conditions that are the most satisfactory. The situation becomes even more complicated when a user needs to swap a less popular asset or make a series of swaps in a row to receive the desired token. Such a multitude of choices demands a lot of expertise and time, something that many users may often lack.
Additionally, liquidity is a significant concern when analyzing platforms and choosing the best one for a specific trade. Every user must remember that inadequate liquidity can result in difficulties when buying and selling an asset, particularly for large-volume transactions. This factor can have a significant impact on trading performance, and it can leave a negative impression on users regarding using DeFi products and services.
As you can see, planning routes for trading crypto assets is often a laborious activity that requires careful consideration, as each decision may have significant ramifications. Addressing the complexity of trading crypto in DeFi is essential for the well-being and prosperity of the industry.
By taking an innovative-driven approach and carefully assessing the evolving demands of both crypto users and the dynamic crypto market, Kinetex has achieved a significant breakthrough. The team has streamlined the asset-swapping process and made it profitable for the users by bringing together hundreds of liquidity sources in one place and developing solutions, such as the Kinetex Advanced Router and route building, that can help to take advantage of all the available liquidity and open opportunities.
From a technical standpoint, the route-building process involves three components within the Kinetex internal infrastructure: Quote Fetcher, Route Finder, and Calldata Builder.
First, the Quote Fetcher service is launched after a user submits a route request. It gathers data required for further analysis and route building, such as rates, available liquidity volumes, etc.
The collected data are transmitted to the Route Finder service, which exhaustively analyzes all feasible routes. Based on several factors, including profitability, speed, and security, this service chooses the most efficient way to trade any asset supported by Kinetex, constructing the most optimal path.
After the route has been created, the Calldata Builder helps generate the necessary data package for the transaction, which the user then signs to allow on-chain route verification.
Kinetex is designed to maximize user profits. Its quote engine operates in layers, each dedicated to a particular aggregated DEX or bridge. Once every layer returns the best possible option, Kinetex creates a list of routes combining different quotes and allows users to select the best based on their preferences and goals. Moreover, Kinetex uses already existing aggregation solutions, including popular and trusted DEX aggregators that also optimize routes on their ends to ensure the most satisfactory rates.
Another way Kinetex enables users to increase their profits is by switching to swapping assets in a neighboring network with lower slippages and then returning to the original network.
Finally, regarding cross-chain bridges, Kinetex’s advanced algorithms can automatically pick which intermediate token should be used for maximum capital efficiency, helping to make cross-chain swaps even more cost-efficient.
The Kinetex Advanced Router is another essential feature that complements Kinetex’s route-building capabilities. The crypto industry’s rapid expansion has led to a significant increase in networks and tokens. On the one hand, it creates new opportunities for users. On the other hand, it introduces new challenges for DeFi projects seeking to bring together existing networks and available liquidity and enhance user experience.
Since multi-part swap routes require calling each smart contract separately, the atomicity of the entire operation seems impossible to achieve. Consequently, its lack leads to excessive gas expenses and necessitates users to stay online to confirm transactions.
The Kinetex team devised a solution by creating the Kinetex Advanced Router. This Router acts as a smart contract consolidating multiple swap points in a single network. This way, Kinetex ensures that the entire operation within each network is atomic, thus decreasing potential gas costs and removing the need to call each contract individually.
From the project’s inception, the Kinetex team has been focusing on making sure that its solutions are easy to understand and use, and the first solution, Liquidity Aggregation, was no exception. Kinetex introduced the Kinetex Advanced Router to assist users in trading their assets cross-chain with minimal time spent on route selection.
The team remains committed to prioritizing user experience and security in the upcoming mode of the Kinetex dApp, Flash Trade. This mode will redefine the swapping process completely, offering a truly effortless experience.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Money Virtuo journalist was involved in the writing and production of this article.