Liquidity Aggregation and Flash Trade are two modes of the Kinetex dApp. They represent the evolution that the Kinetex team has been going through, searching for solutions that can transform user experience with crypto for the better.
The Liquidity Aggregation mode was created to overcome liquidity struggles that have been highly prominent in the DeFi industry for a while. With liquidity concentrated on popular centralized platforms, decentralized projects have had difficulties providing adequate amounts to ensure seamless operation. Kinetex aggregated over 400 liquidity sources to eliminate this issue, including DEXes, DEX aggregators, cross-chain bridges, protocols, and more. Moreover, by creating a network of relay nodes, Kinetex was able to automate the swap process, making the app more user-friendly and efficient.
Flash Trade was created after much deliberation to change how the crypto community approaches cross-chain transactions altogether. It is designed to solve multiple industry problems, including expensive gas fees, long execution times, and MEV attacks, by enabling direct trades between users and market makers.
Let's examine the two modes in more detail and compare their approaches to the key aspects of cross-chain trades.
While the first mode aggregates liquidity across chains, Flash Trade depends on the network of market makers (called resolvers in the Kinetex ecosystem) to provide sufficient liquidity to users. Resolvers can search and compare liquidity presented at both CeFi and DeFi platforms or even use their own liquidity when trading with users. This way, Kinetex can eliminate several common threats, including MEV attacks, hacker attacks on liquidity pools, and price slippage.
Kinetex offers quick execution of swaps in both modes. However, Flash Trade allows instantaneous trades due to the resolving approach, with an average time to complete a swap of 10 to 15 seconds. In rare cases, when a resolver has a problem completing an order and an execution period exceeds a maximum time limit of 2 minutes, the system will automatically trigger a liquidation process to close the order as quickly as possible.
Aggregation mode provides users with search algorithms that automatically build the most optimal routes using aggregated liquidity sources. Consequently, users can swap assets at advantageous rates, choosing the most suitable routes. Moreover, they can select the slippage tolerance, adjusting it according to their needs (the bigger the slippage chosen, the higher the chance of an order being completed quickly).
Flash Trade ensures advantageous rates in a completely different way. It is possible due to the nature of the cross-chain approach implemented in this mode. Since it is based on the network of resolvers, they naturally compete with each other for orders, motivated to offer better prices. Moreover, since users swap directly with makers, there is no slippage, so they can be sure they will receive the exact amount they agreed on. As a result, Kinetex ensures good pricing conditions for users of both modes.
Kinetex supports over 5,000 crypto assets across eight networks in the Liquidity Aggregation mode, including Ethereum, BNB Chain, Polygon, Arbitrum, Optimism, Avalanche, Fantom, and Gnosis Chain. Such a variety of liquidity sources enables Kinetex to ensure that users can find liquidity even for lesser-known tokens.
The Flash Trade mode may have less coverage as its liquidity depends on resolvers. So, this mode is better suited for swapping more wide-spread assets, which are popular among traders. Nevertheless, Kinetex covers an extensive range of coins and tokens and can help to exchange both high- and low-liquidity assets.
Kinetex offers a gasless flow in both Liquidity Aggregation and Flash Trade modes. In Liquidity Aggregation, users have two options while paying gas fees using Universal Gasless. They can choose routes that use permit tokens or opt for an escrow service that allows them to borrow native coins to make payments across any network after making a gasless deposit.
In Flash Trade mode, users can enjoy an even simpler gasless experience since resolvers handle all gas payments. Thus, users do not need to worry about storing or managing native coins in this mode either.
The Liquidity Aggregation mode has been a game-changer in the DeFi industry by enabling users to access a vast range of liquidity sources in a single dApp, without navigating through various platforms to find the best rates. Additionally, the automation of the swap process has made the entire process much smoother, faster, and more secure.
On the other hand, Flash Trade will offer a unique solution to the long-standing problems plaguing the crypto industry. With direct trades between users and market makers, the platform will provide a faster and more cost-effective way to execute cross-chain transactions.
Although both modes greatly differ in terms of transaction execution methods, they embody the Kinetex team's goal of making crypto more user-friendly and beneficial for users.