What is an aggregator? And how does a crypto aggregator work?
1 — a person or thing that aggregates.
2 — a web-based or installed application that aggregates related, frequently updated content from various internet sources and consolidates it in one place for viewing.
Once we get over how incredibly helpful and deeply insightful that definition #1 is, we can better understand the crux of what an aggregator is — something that pulls information from different places and adds value by making it available in a single place and in a more usable format.
Web-based aggregators exist in many different formats: search results, retail prices and inventory, travel itineraries, and even weather forecasts.
They also exist in the world of crypto, but what purpose do crypto aggregators serve?
It’s all about the numbers.
Today, there are more than 10,000 cryptocurrencies in circulation and dozens of major blockchains including Ethereum, BNB Chain, Polygon, and others. To swap, therefore, is easier said than done, and that’s where aggregators enter the fray.
Let’s say you want to swap Token A for Token B. They both trade on the same blockchain, but you’re not sure how to get the best price on your transaction. In this example, an aggregator can show you where to get the lowest cost swap (and then execute that swap on your behalf).
So what benefits do aggregators bring to the crypto ecosystem?
- Information: As we stated earlier, the essence of an aggregator is taking information from multiple places and combining that information in a way that adds value. By determining the price of swapping two tokens on different exchanges, aggregators make it easy for holders to find the lowest possible cost — thereby adding value to holders.
- Executing the Swap: Aggregators aren’t just information repositories. They’ll also execute the swaps that they find for you. (If you’re keeping track, that’s more value for holders.)
- Aggregated Liquidity: Liquidity can best be understood as the ease with which two goods can be traded. By making it possible to swap tokens that trade on different exchanges, aggregators provide access to multiple liquidity sources at once that otherwise are fragmented and hard to find.
Here at Bridges, we’ve previously written about our plans of making Bridges Exchanges a hybrid DEX-Aggregator. So if you were wondering… Why this post and why now? Then let us clear the air: We’re actively working on building our aggregator with the goal of launching by the end of the year.
Interested in other introductory and how-to content? Visit the Bridges Knowledgebase at https://learn.bridges.exchange/ to learn everything needed to get started in DeFi.