With the early beginnings of a bull run in crypto, one of the most important new tools to master is trading on decentralized exchanges (DEXs) on Ethereum. For those of us trading tokens powered by Ethereum (ERC20 tokens), it’s important we can trade on DEXs that offer the following:
- Security–reputable developer teams, with audited coded to avoid smart contract bugs
- The best trading rates in decentralized finance
- The least slippage with the deepest liquidity
Fortunately in 2020, there’s countless DeFi applications with deep liquidity to trade on like Uniswap, Balancer, Curve, SushiSwap, Mooniswap, Kyber Swap, and more!
However, when you search for a flight, do you search every airline website to find the best rate? Of course not! We use search engines to aggregate all the potential flights available to find the best rate. When we trade in DeFi, the same concept exists in what’s referred to as a DEX aggregator.
A DEX aggregator gets you the best price for your trade across multiple DEXs, even splitting up your trade across different liquidity sources to improve the price. It’s not just a matter of knowing where to trade in DeFi anymore. You’d be competing against continuously refined algorithms to optimize trade routes, rates, slippage, and against the backdrop of major liquidity fluctuations in real time.The most reputable DEX aggregators on Ethereum, in no particular order are:
- 1inch Exchange
- ParaSwap
- Matcha by 0x
- Dex.ag
Here’s a quick example on 1inch Exchange: Let’s say you have 1 WBTC and wish to trade it for the CRV token from Curve Finance. Below, 1inch has mapped out 3 trades split across multiple major DeFi liquidity sources including Uniswap, Curve, Mooniswap, and SushiSwap to achieve the best trading rate for your order.
How to Trade with a DEX Aggregator
Fortunately, these DEX aggregators provide APIs to allow other DeFi builders to empower even more users with their trading capabilities. I personally have used all 4 of these DEX aggregators but today, I’ll show you how to use the power of the Matcha DEX aggregator, powered by 0x.
As you might know, I work for Zapper and we recently implemented the 0x API which powers the Matcha DEX aggregator, so now you can conveniently trade the same best rates and least slippage in the Zapper Exchange, one click away from your Zapper Dashboard, where you track your entire DeFi portfolio. Here’s how!.
1 – Go to Zapper.fi/exchange
2 – Specify the assets you’re trading From and To (eg. ETH to YFI) and the 0x API powering Zapper Exchange will source the best rate or potentially split your trade across up to 15 liquidity sources, routing your order to offer the best trade.
3 – Toggle the Transaction Settings to choose a Slippage Tolerance to protect yourself from excessive slippage. I often choose 1% and if Zapper indicates the trade won’t go through due to a lack of liquidity when I click Exchange, I’ll increase Slippage Tolerance to 2-3%.
4 – If starting with an ERC20 token (anything but ETH), you must Approve a spending limit first.
5 – The second transaction (or first when starting with ETH), click Exchange.
That’s it! DEX aggregators are a powerful tool that should be bookmarked for trading in DeFi. Using the same old DEX or searching a few of your favorite DEXs for the best rate is waste of time. Save…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
