Totle’s API is built around three core properties: Security, Accessibility, and Price. Traders and builders of decentralized finance apps are naturally drawn to the security and accessibility benefits of operating with decentralized exchanges (DEXs), since these are typically the more obvious benefits to trustless systems. But what about DEX pricing?
There are distinct price advantages to integrating with Totle versus integrating with any of the various individual exchanges. We often see exchange integrations that do not execute as quickly or at the same price that Totle can. This is because at any given time, some markets are more efficiently priced or have more liquidity than others, and the only way to know is to check each exchange, or use Totle.
Where Do Totle’s Price Savings Come From?
Using our API, we performed multiple A/B tests to identify which DEXs were most competitively priced, and show where and to what extent Totle offers price savings over individual DEXs. The used in this study were all available for each market at each trade size. You can find a full list of available in.
It is important to note that there are a couple of limitations to this data. First, the data reflects the best prices based on the current state of the various DEX order books and smart contracts, which, depending on how on-chain transactions are ordered, may not exactly match the actual prices obtained from the DEXs. (Nonetheless, they are a good enough estimator for these price comparisons.) Secondly, these numbers do not take gas into consideration; this is a factor that our next pricing experiment will take into account.
Digesting the Data
First and foremost, it is important to note that prices are not the same for different sized trades — but that is to be expected. Pool exchanges such as Kyber, Uniswap and eth2dai base their prices off of liquidity pools, and not traditional order books. Therefore, the price varies based on how much you’re trying to trade. The data suggests that on average Totle saves an extraordinarily high amount versus order book exchanges, such as EtherDelta, Radar Relay, and Store.
We also find that pool exchanges are more competitively priced. However, the fact that pool exchanges are competitive today does not mean they will be competitive tomorrow. dApp developers should not have to continuously monitor DEX volumes and prices to stay on top of which markets are developing best.
Keep in mind that DEX volumes represent far less than 1% of all crypto volume today. This is due in large part to the fact that you need competitive pricing and liquidity to attract traders, but to get liquidity and better pricing, you need more traders. It’s a classic chicken-and-egg scenario. It’s hard to anticipate where the distribution of trades will fall in a few months’ time, and that fact alone has kept dApp developers on the sidelines for DEX integrations.
Why Use Totle?
Some pairs only exist on a few DEXs; therefore, it is important to try to incorporate as many DEXs as possible to offer more to your users. Furthermore, we often see trades being split between more than one exchange. That’s because our system takes advantage of splitting orders between more than one exchange when we see an opportunity to save our users on the aggregated price.
With Totle, developers and applications have guaranteed DEX liquidity, no matter where the market moves. We make it our job to consistently integrate new DEXs and provide the best order routing system. We abstract away the complexities of differing protocols, WETH, acquiring protocol (0x, KNC, etc.), and more.
We hope this analysis helps shed light on Totle’s product value and brings confidence to the community that the DEX ecosystem will mature with time.
Published at Wed, 01 May 2019 05:50:59 +0000
