DEX aggregators: The ultimate solution to reduce price slippage in DeFi

cointelegraph.com:

Price slippage is a constant risk in trading on centralized exchanges (CEXs) and decentralized exchanges (DEXs) alike. It occurs when a trader’s order is executed at a different price than the one intended. It can happen due to high volatility, low liquidity or delays in order execution, resulting in a noticeable difference between the expected and actual transaction price.

The DeFi ecosystem prioritizes decentralization and transparency, so the price slippage problem is more prominent than on centralized platforms.

On CEXs, price slippage is caused by factors such as low liquidity, high volatility and order book depth. CEXs are platforms that connect buyers and sellers of digital assets, with order books being a key element.

An order book is a record of all buy and sell orders placed by traders for a particular cryptocurrency. It displays the quantity and price of each order, and orders are arranged by price. For example, if someone wants to buy $1,000 worth of Bitcoin (BTC) and there is another trader looking to sell his Bitcoin for a similar amount, these orders will be matched in the order book. Market orders are executed immediately at the best price, while limit orders are executed at a price indicated by the trader when there is a match.

The depth of an order book is defined by the quantity of buy and sell orders at different price levels. Market depth is a key indicator of liquidity on any platform. Thus, the greater the market depth, the lower the chance of price slippage, thanks to the balance between buy and sell orders.

In reality, liquidity is not only provided by regular buyers and sellers but mainly by market makers, who place orders at both ends and profit from the bid-ask spread.

Large CEXs can boast great