What is DeFi Aggregator
A DeFi Aggregator is a platform that consolidates trading information from different DeFi protocols in one place. By aggregating trading information from places like DEX, lending protocols, and liquidity pools, it provides users with better liquidity and trading prices on a single platform, helping them to improve trading efficiency. DeFi aggregators can be broadly categorized into four types based on their functionality: DEX Aggregators, Yield Aggregators, Asset Management Aggregators, and Information Aggregators.
DEX Aggregators can be thought of as a DEX browser that provides users with multiple prices and liquidity. It combines data from numerous DEXs (including execution prices and trading fees) and provides users with trading pairs, order books, and execution prices from different blockchains on a single platform. DEX Aggregators are built on robust algorithms that offer users better execution prices, trading fees, liquidity, and returns. However, due to the relatively complex algorithms used, DEX Aggregator's transaction fees are often higher than general DEXs.
The main features of DEX Aggregators are as follows:
- For larger transactions, DEX Aggregators can often help users save transaction costs. Because larger transactions are prone to higher price slippage, DEX Aggregators can help users connect to the optimal liquidity pool to solve the problem of high slippage caused by insufficient liquidity.
- The liquidity depth of some long-tail small-market-cap assets on a single DEX is often inadequate. Therefore, by aggregating liquidity from multiple platforms, DEX Aggregators can provide better execution prices than singular DEX.
The first DEX Aggregator was created by Sergej Kunz and Anton Bukov at the 2019 ETHNewYork hackathon and is now one of the most famous DEX Aggregators, 1inch.
1inch is a DEX Aggregator that consolidates trading data from multiple DEXs such as Uniswap, Kyber, and Curve into a unified platform. Through 1inch, traders can obtain optimal liquidity and execution prices from multiple DEXs. For example, 1inch integrates more than 30 liquidity sources on Binance, allowing users to trade on the platform by selecting trading pairs with the lowest fees and the best execution prices without separately visiting these DEXs.
Yield Aggregators are automated DeFi protocols based on smart contracts, also called "yield optimizers" or "yield compounders." They are created for liquidity mining and can automate the process of liquidity mining and generate compound interest by repeatedly staking.
Liquidity mining is a DeFi investment strategy that helps users earn higher investment returns by staking their assets in multiple DeFi yield products and services.
To learn more about what liquidity mining is, please refer to the "What is yield farming/liquidity mining?" section.
The main features of Yield Aggregators are as follows:
- Yield Aggregators automatically execute the staking steps through smart contracts to achieve the compound interest function, which can help users simplify the investment process.
- Yield Aggregators aggregate the investment returns of multiple DeFi yield products and provide users with the best investment options on a single platform. At the same time, it also provides users with customizable investment strategies.
Currently, the Yield Aggregator with the largest TVL is Yearn Finance, created by Andre Cronje. It was also one of the earliest Yield Aggregators (July 2020). Yearn's main product is its yield strategy product (Vaults). It uses auto-execution code to execute investment strategies to maximize user returns. Users can deposit stablecoins, ETH, and other crypto assets into Vaults to earn passive income.
To learn more about what Yearn Finance is, please refer to the "What is yearn.finance (YFI)?" section.
Asset Management Aggregator
The Asset Management Aggregator is essentially a DeFi asset management platform. It helps users monitor and manage all of their DeFi assets on a unified platform, while also providing one-stop investment opportunities.
The main features of Asset Management Aggregators are as follows:
- Users can use the dashboard on the Asset Management Aggregator to monitor their assets and loans in real time.
- The Asset Management Aggregator brings together investment opportunities from various DeFi protocols, reducing search costs for users.
The main Asset Management Aggregators include Zerion, Debank, Zapper, and others. They cover investment opportunities from various DeFi platforms, such as DEX (Uniswap) and lending protocols (Compound).
The Information Aggregator collects information from various channels. Users can use the Information Aggregator platform to discover, search, and analyze all information they want to know. The information in the Information Aggregator may cover various fields, including finance, real estate, academics, etc. For example, one of the most commonly used financial information aggregators is Bloomberg.
For the Crypto industry, the Information Aggregator is one of the necessary means for investors to understand this field. TokenInsight is essentially a Crypto information aggregator. It collects various Crypto-related information. Investors can track token-related information such as prices and trading volumes, project-related information such as project mechanisms and ecosystems, crypto news, and rating information in multi-dimensions on TokenInsight.
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