Crypto aggregators are rightly one of the most recent groundbreaking developments in DeFi. An increasing number of users are now using aggregators to trade cryptocurrency. A cryptocurrency aggregator helps us guarantee cryptocurrency liquidity and ensures uninterrupted crypto trade without days off or holidays.
This article will help you better understand what crypto aggregators are, how they work, and how to build one for your business.
- What is a Crypto Aggregator?
- How does a Crypto Aggregator work?
- Benefits of a Crypto Aggregator
- How do Crypto Aggregators solve crypto’s liquidity problems?
- How to build a Cryptocurrency Aggregator?
- Key features of a Cryptocurrency Aggregator
- Closing thoughts
What is a Crypto Aggregator?
Crypto aggregators allow you to combine cryptocurrency trading data from the biggest exchanges to a single price feed in real-time. It brings together trades across different decentralized finance platforms into a single platform.
With a cryptocurrency aggregator, many brokers and crypto-instruments can be united on a single platform, opening access to the cryptocurrency market for a wider population.
These aggregators use dApps, smart contracts, oracles, and APIs to collate data from different DEXs and CEXs on a single platform. Traders don’t need to switch between exchanges to find out the best price of an asset.
Related Article: Exchange Vs Swap Vs DEX: How does it differ?
How does a Crypto Aggregator work?
A cryptocurrency aggregator uses price oracles that connect multiple exchanges and provide the latest price feed. It’s similar to using platforms like Make My Trip or Trivago to compare hotel and flight prices.
Without using a cryptocurrency aggregator, users need to go to each crypto trading platform individually to compare prices to make the best trade possible. Then, the user needs to execute each transaction using smart contracts manually. This strategy may suit casual crypto traders, but at the same time, it severely limits those looking to implement advanced trading strategies.
Once a trader picks up a trade, the protocol runs the trade across all exchanges and swap protocols. In finding the best platform for the trade, the protocols execute the trade, allowing the trader to make maximum profit.
Related article: How to launch a cryptocurrency exchange?
Benefits of a Crypto Aggregator
Cryptocurrency aggregators are useful not only to users/traders but also to companies. Users can receive all the vital information on a single united interface without going through multiple log-in procedures across multiple exchanges. Aggregators also regulate users’ interactions with exchanges, dApps, investment platforms, etc.
In fact for companies, aggregators serve as a great platform to find customers. A cryptocurrency aggregator is one of the best ways to introduce a new project to the audience and increase its liquidity.
Here is a brief list of the benefits these aggregators offer:
- It saves time: Aggregator platforms allow users to assess and compare all the available prices of different crypto-assets, saving them time from having to view, visit, and sign-up on different exchanges manually.
- It guides decision-making: Aggregators allow comprehensive price comparison across different exchanges, facilitating easy trading. Moreover, this makes the price comparison process simple and instantaneous and allows users to make an informed decision.
- It provides a wider array of coin choices: Aggregators feature multiple coins from every exchange they partner with. In addition, this increases the available alternatives for crypto traders and investors and allows them to reap the maximum benefits from a wide range of cryptocurrencies.
- It is more secure: Unlike crypto exchanges that store sensitive details in the exchange, the funds are stored in the users’ wallets in aggregators. Therefore, there are no impending security challenges in the case of these aggregators.
Related Article: What is a Peer-to-Peer (P2P) crypto exchange? How does it work
How do Crypto Aggregators solve crypto’s liquidity problems?
The concept of liquidity is multi-faceted, so it influences the price of a cryptocurrency in many ways. In simple terms, we can define liquidity as the ability of an asset to be converted to cash on demand. In brief, liquidity means that there aren’t any discounts or charges associated with buying or selling an asset.
Let us dive into the issues in liquidity that the crypto world faces and get a better insight into how cryptocurrency aggregators solve these issues.
1. Availability across exchanges: When a limited supply of a particular cryptocurrency is distributed across different crypto exchanges, the liquidity on each exchange can impact its price. Without sufficient liquidity, traders cannot enter or exit their desired positions. The improved decision-making ability of cryptocurrency aggregators helps us find reliable crypto exchanges, thereby attracting more people to crypto trading. The increase in frequency and volume of crypto trading helps to enhance liquidity.
2. Acceptance and security: Cryptocurrency aggregator allows people to retain their cryptocurrencies outside an exchange. This feature of aggregators has greatly increased the acceptance of cryptos in physical brick-and-mortar stores, online marketplaces, and other businesses, thereby enhancing the utility of crypto and decreasing its volatility and unpredictability.
3. Regulations: Direct or indirect regulations have a crucial role in the liquidity of a cryptocurrency. Authorities in most countries are still observing the situation of many prominent cryptos and are even working on its regulations. Cryptocurrency aggregators featuring multiple cryptos allow both crypto traders and investors to choose between available alternatives based on their benefits.
4. Lack of awareness: Limited knowledge and lack of clear guidelines by authorities have limited the trade of cryptocurrencies among crypto enthusiasts. As the crypto world expands, the availability of a reliable cryptocurrency aggregator will enable more people to engage in crypto trades.
Related article: How to build a DeFi Yield Farming dApp?
How to build a Cryptocurrency Aggregator?
The development of a cryptocurrency aggregator should pass from the following stages:
- Discovery: This stage requires double-checking that there is an audience and a demand for a product that you’re creating. During this phase, the development team works with the customer to determine the scope of work, budget, deadlines, etc. Moreover, this also includes studying the niche and analyzing competitors’ pros and cons.
- UX/UI design: The whole purpose of a cryptocurrency aggregator is to improve user experience by providing a single interface that works with different protocols. A good design should allow users to navigate your aggregator easily and quickly. Good user experience is the key to building a loyal audience.
- Back-end or smart contracts protocol development: Aggregators work on smart contracts that enable automated and decentralized functioning. Your development team should be able to build proper algorithms for the platform’s daily operations. Also, this includes a blockchain protocol for the aggregator and interoperability protocols.
- Front-end development: This is the part that users interact with directly. The front-end development team should ensure that the elements are positioned correctly and fulfill their functions effectively.
- Testing: It is necessary to test that everything on your aggregator works flawlessly and guarantees total security before welcoming real users. Testing allows you to identify and prevent system vulnerabilities.
Key features of a Cryptocurrency Aggregator
A cryptocurrency aggregator is known for providing easy and effective features to users.
Additionally, here is a list of core features that you should include in your aggregator:
1. Sign Up
A user needs to connect his wallet to store and transfer crypto assets. Your aggregator should be able to support a list of wallets to implement this integration.
2. Dashboard
A dashboard is one of the main features that will help your users. It can allow them to instantly assess the value of their portfolios or categorize their assets into various categories. Moreover, this helps users structure information and navigate faster.
3. Exchange tab
This feature will allow users to quickly and beneficially exchange one crypto asset for another. A good example is Zapper which aggregates the most liquid Uniswap and Balancer markets and presents users with the best deal. Creating an order also allows users to specify gas and slippage tolerance settings.
4. Liquidity pools
These are collections of funds placed in a smart contract by liquidity providers. The reserves are pooled between a network of liquidity providers who supply the system with tokens and receive rewards. Different platforms offer different rates and commissions. Some also offer various bonus systems that work to attract capital to their platform.
5. History & analytics
Giving users the ability to track their transaction history and performance will add an edge to your aggregator. An example is Zerion which displays all the data on a single transaction history page in a graph.
6. Farming
Post the launch of Yearn, Yam Finance, and Sushiswap projects, aggregators are actively using the trend of yield farming. Also, it generates more income from the placement of cryptocurrencies on multiple Decentralized Finance platforms for crypto-lending. In addition, this helps DeFi aggregators create favorable conditions to attract capital to their platforms.
If you plan to build a reliable cryptocurrency aggregator, consult with a reliable blockchain development company to do a feasibility analysis.
Related Article: Blockchain as a Service (BaaS): How to choose the right provider?
Closing thoughts
Amidst the growing number of cryptocurrency exchanges and decentralized platforms, the concept of cryptocurrency aggregators appears to be a promising solution that can lower crypto’s entry barriers. In brief, aggregators allow beginners and pro-level traders to leverage the full potential of the entire crypto ecosystem without having to shuffle between multiple exchanges.
