< Back to all articles

Kinetex Aggregation Protocol

December 19, 2023

Continuing the series of posts about Liquidity Aggregation, the first solution that the team introduced, let's look at how this mode works from a technical point of view. 

The Kinetex team developed Liquidity Aggregation to address common obstacles encountered in the DeFi domain, particularly when swapping assets between blockchains. As you may have experienced firsthand, liquidity is widely dispersed among a plethora of networks, platforms, and pools, making it difficult for users to navigate and manage their assets efficiently. To address this issue, the team has implemented a cutting-edge solution that leverages relay nodes and gasless technology to provide the best swapping experience. 

The Kinetex system aggregates all the dispersed liquidity in one place, simplifying the user experience by enabling them to access everything they need in one place and with just one click. This elegant and intuitive solution saves users valuable time and effort by streamlining the process of managing their digital assets, which is often pretty complex.

Protocol Architecture 

The Kinetex Aggregation solution is structured into four layers, each with its own function. 

The Aggregation Layer is responsible for aggregating a broad range of solutions that together can ensure sufficient liquidity for trading over 5,000 crypto assets at any time of the day. Such solutions include decentralized exchanges (DEXes), DEX aggregators, cross-chain bridges, different protocols, and other possible sources of liquidity.

Combining such a wide variety, Kinetex empowers users to find adequate liquidity for thousands of tokens without leaving the dApp. Moreover, the superfluity of liquidity solutions allows for the most advantageous rates, both on-chain and cross-chain. 

Next is the Routing Layer, whose primary purpose is building optimal swap routes using all liquidity sources available. At this stage of a swap, all the required data, including quotes, fees, commissions, liquidity volumes, etc., is gathered, analyzed, and then used to build swap routes that allow the trading of crypto assets most beneficially and efficiently. In addition, data to launch the on-chain infrastructure of the Kinetex Aggregation mode is also generated at this layer. 

Note that the Routing layer utilizes the internal backend infrastructure. You can learn more by reading the related documentation here.

The User Interface Layer (UI) goes third. As the name suggests, this layer determines user interaction with Kinetex's Aggregation mode by providing a streamlined and flexible interface for trading assets via the Kinetex dApp. Consequently, the users can easily navigate the swapping process step-by-step. These steps are selecting crypto assets users would like to swap, configuring swap parameters that can be adjusted (including assets for gas payments, slippage, preferred liquidity sources, etc.), viewing the details concerning routes and all related costs, etc. Furthermore, users can monitor the swap status and access a history of previous swaps.

The Execution Layer is the fourth layer in a system, which is in charge of executing user swaps. It comprises a group of smart contracts and the infrastructure critical for their successful deployment. The network of Kinetex relay nodes is employed to facilitate this process, with its primary function being to run Kinetex Aggregation contracts on all supported networks. Those contracts then communicate with the contracts of the swap and bridging protocols and pass swapped assets along the route.

Main Benefits

Kinetex Aggregation Protocol has multiple advantages, including a user-friendly interface, automation, advanced routing, gasless flow, and a wide range of liquidity sources. Even though some of them were touched on previously, let's look at them in more detail.

First of all, with the help of relay nodes, Kinetex is able to simplify cryptocurrency transactions significantly for users by automating their execution. Kinetex relay nodes estimate all gas costs that users will have to pay during swaps and then execute each user's transactions automatically, including assisting with pre-calculated gas payments. Thanks to automation, users do not need to remain online during transaction execution to control each step of any swap. Additionally, users are freed from managing native coins for gas payments and making fee calculations themselves. As a result, Kinetex not only provides an intuitive interface, which makes accessing DeFi services easier even for non-tech-savvy users, but also complements it with a streamlined swap experience. 

Secondly, Kinetex comes with integrated routing algorithms that automatically explore and analyze all available liquidity sources, building the best, most optimal swap routes in terms of both cost and time. Thanks to this feature, Kinetex helps users swap thousands of crypto assets more efficiently and profitably, saving the time and energy previously spent manually searching and comparing different routes and rates on various platforms. Moreover, Kinetex's algorithms can help use liquidity from a variety of DEXes and protocols to maximize user profits by splitting the swap amount if deemed more beneficial.

You can learn about other benefits in this post

Final Thoughts

The four-layered architecture of the Liquidity Aggregation Protocol played a key role in helping Kinetex achieve high efficiency and accessibility in its solution. Consequently, Kinetex was able to address issues regularly met by users among DeFi products and services, such as complex interfaces that are too difficult for ordinary users to understand, insufficient liquidity spread out across the blockchain universe, and intricate swap processes.

Kinetex Network: Website | Kinetex dApp