DEX Routing / Aggregation

DEX routing, often called aggregation, is the practice of splitting a single trade across multiple decentralized exchanges and liquidity pools to get better overall execution than any single venue could provide. Onchain liquidity is fragmented: the same token pair may trade in dozens of pools with different depths, fee tiers, and price curves. A router examines these venues, estimates the price impact of trading in each, and divides the order so that no single pool has to absorb the full size.

The logic behind routing is straightforward. Price impact grows with trade size relative to pool depth, so pushing an entire order through one pool moves the price against you more than spreading it across several. Aggregators also chain hops through intermediate tokens when no deep direct market exists, for example routing token A to USDC to token B. The result is quoted as a single effective price, and the whole route typically settles in one atomic transaction, so you either get an acceptable outcome or the trade reverts.

Routing has trade-offs. Touching more pools costs more gas, and complex routes expose the trade to more contracts, each with its own smart contract risk. Quotes can also go stale between signing and execution, which is why routers enforce slippage limits. Index platforms lean on routing heavily: Tessera, for example, routes a single trade across DEXs and ERC-4626 vaults so a buyer can enter a whole basket of assets in one transaction. Better execution reduces cost, but it does not remove market risk, and no route guarantees a profitable trade.