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Why DeFi Aggregators are the Next Hot Activity in Web3 Growth

In this post:

  • Interest in DeFi aggregators re-surged in May.
  • A new batch of top aggregators is rising, boosted by meme coin trading on DEX.
  • Aggregators offer cheaper, smoother trading for both leading and niche blockchains.

A new category of projects emerged because of the 2024 bull market. DeFi aggregators are the answer to an ever more complex system of decentralized exchanges and pairs. Aggregator volume is replacing direct inflows to DEX hubs. 

In May, even Google searches started to reflect an emerging mainstream interest in DeFi aggregators. A small selection of tokens also reflects the new batch of projects dealing with aggregation-based trading. The focus of those tokens is to provide optimized swaps at the best price, while handling issues with using cross-chain tokens. 

No exclusive list of DeFi aggregators exists, and the sector constantly competes. Aggregators’ performance depends on their specific blockchain. For instance, demand for the 1inch aggregator varies more on the Optimism blockchain compared to its influence on Ethereum

List of tokens linked to DEX aggregators, listed by Coinmarketcap.

Source: Coinmarketcap

The buzzword of “aggregator” may draw in new projects, but not all will offer immediate cross-chain trading. Aggregators are part of a bigger trend in inter-chain connections, which aim to make Web3 projects more compatible. 

In the past few months, several aggregator tools emerged as the biggest brands, drawing in the majority of the traffic. In previous bull markets, there were tools to switch between different chains. But now, new projects are improving how they connect and move money around. 

Also read: Solana DEXs Exceed Forecasts With a Trading Boom

DEX aggregators are also different from yield aggregators, which focus on farming. The success of DEX aggregators coincides with the boom of meme token trading, drawing activity to make the most of highly volatile assets. Most meme tokens also launched their trading on a DEX, requiring fast tools for sniping. 

A New Batch of Aggregators Take Over Trading

The gross volume of aggregator trades peaked in March, coinciding with the market’s high water mark. Since then, overall trades fell by 44%. For specific protocols, however, growth is still robust as a new batch of aggregators is rising. 

In the past few weeks, Magpie Protocol emerged as the leader of growth after picking the most active selection of chains. The aggregator works on Ethereum, Arbitrum, Polygon, Avalanche, BSC, Optimism, and Base blockchains. The protocol increased its inflows by 1,823% in a month, lining up among top aggregators. 

Also read: Jupiter DEX Opens Access to Multiple Solana Tokens, Now Accessible in Coinbase Wallet

WOWMax, Kana Labs, and DEX Hunter are also among the expanding protocols for aggregators drawing in more than $1.5M. The projects are still in the growth phase and are trying to align with top aggregators.

https://twitter.com/kanalabs/status/1791752173505917009

Jupiter, an outlier that aggregates Solana trades still dominates the lead spots. All other DEX aggregators tailor their services to Ethereum, including L1 and L2 networks that are compatible with ETH, and often incorporate BSC and Base due to the substantial liquidity in their ecosystems. 

At the same time, former aggregator star Pangolin has lost most of its inflows from the 2021-2022 bull market. Recent highly used aggregators like 1inch also experienced lower activity in the past four months, with some of the volume moving to other tools.

Niche Aggregators Fight for Attention

One issue with the biggest aggregators is that they also focus on already developed leading DeFi ecosystems tied to the most influential blockchains. However, there is always a need for aggregator tools for more niche blockchains. 

This smaller tier of blockchains is also growing a DeFi presence and demands some form of cross-connections. Those aggregators span the Shibarium network, Cardano, Injective, Internet Computer and Sui. 

Aggregators are also coming for the growing trend of Bitcoin-based DeFi. One of the existing projects, Open Ocean, is working on adding aggregation for Bitcoin DeFi. New projects are also planning to specialize in aggregation for this new DeFi trend.

 

Aggregators are also a workaround for finding the best transaction price. Some of them use transaction batching to avoid fees. However, aggregators are still a technology in development and not all have full trading features. 


Cryptopolitan reporting by Hristina Beeva

 

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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