Below is a summarized version of The Block Research's A Deep Dive into the Future of Onchain Liquidity Routing report. The full PDF version of this report is accessible here.
In a fragmented onchain market, best execution is no longer guaranteed by sticking to a single venue. Liquidity that once lived in a handful of places now spans thousands of pools and a growing set of DEX venues across multiple networks, each offering different prices and liquidity depth. This fragmentation turns a simple token swap into a complex search and optimization problem.
DEX aggregators exist to abstract away that complexity and present users with a single best option. Conceptually, they play the same role as a flight search engine. Rather than forcing users to check venues one by one, an aggregator scans the market and presents a route that maximizes realized execution quality. As onchain activity expands and liquidity continues to fragment, aggregators are no longer merely a convenience; they are increasingly the default access layer for efficient onchain trading.
Mechanically, an aggregator takes a user instruction such as “swap X of token A for at least Y of token B” and converts it into an execution plan. To do so, aggregators rely on two primary infrastructure components: a routing engine and a transaction protection layer.
