1nch.exchange is a DEX aggregator. Yea, right. So what does that exactly mean?
Let's start with the basics - What is a DEX?
A decentralized exchange (DEX) is a cryptocurrency exchange which operates in a decentralized way, i.e., without a central authority. Decentralized exchanges allow peer-to-peer trading of cryptocurrencies.
Because users do not need to transfer their assets to the exchange, decentralized exchanges reduce the risk of theft from hacking of exchanges. Decentralized exchanges can also prevent price manipulation or faked trading volume through wash trading, and are more anonymous than exchanges which implement know your customer requirements.
There are some signs that decentralized exchanges have been suffering from low trading volumes and market liquidity. The 0x project, a protocol for building decentralized exchanges with interchangeable liquidity attempts to solve this issue.
Okay and what is an aggregator?
Aggregators are web applications that automatically collect related content and/or data from many online sources. They collect the data and put it all into one place to make things easier and more efficient for end-users.
So aggregator applications collect the data according to the aggregator function and chosen metadata and send it automatically to the users who subscribe to it.
Another way to aggregate online content is to use APIs. Web developers can tap into another website using that site’s Application Programming Interface, or API. These online software “bridges” connect applications to each other to share data.
There are also API aggregators. As an example, say you wanted to set up a newsfeed for your subscribers. Let’s choose the topic of artificial intelligence. You could aggregate data from all the relevant AI blogs. You could then deliver a summary to your audience with links to all the latest AI news stories in a given week.
Ah! And a DEX aggregator then is...
DEX aggregators enable traders to access the order books of many decentralized exchanges at once, instead of just one DEX at a time. Many of them also provide self custody, so the crypto of many users is not centrally stored.
So instead of aggregating news content or social media accounts as with other types of aggregators, a DEX aggregator combines cryptocurrency pricing information from the order books of multiple decentralized exchanges.
This creates an ecosystem experience. It also provides a higher level of liquidity and better chances that a trader’s order will be filled. Importantly, it gives traders an easy way to examine competitive prices. Since the aggregators combine the data from DEXes only, the traders can still enjoy the anonymity of DEX trading while experiencing enhanced liquidity for their favorite tokens
And 1inch.exchange is probably one if not the most prominent examples of a DEX aggregator or in their own words "DEX Aggregator with the best prices on the market. Achieving best rates by splitting orders among multiple DEXes in one single transaction..."
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