Friday 04 April 2025
The world of decentralized exchanges (DEXs) has been evolving rapidly, with new protocols and platforms emerging to improve trade execution for users. A recent study has shed light on the impact of solver-based DEXes on trade execution, revealing both advantages and challenges in this burgeoning field.
Solver-based DEXes use third-party algorithms or market makers to determine the best route for executing trades, leveraging off-chain liquidity and minimizing gas costs. This approach aims to enhance user experience by providing better prices and faster execution times compared to traditional Automated Market Makers (AMMs).
Researchers analyzed data from three prominent solver-based platforms – CoWSwap, UniswapX, and 1inchFusion – to examine the effects of these protocols on trade execution. The study focused on two major assets: USDC-WETH and PEPE-WETH.
The results indicate that solver-based DEXes indeed improve execution welfare for users, particularly in the short-term trading range. This means that traders using these platforms can expect better prices and faster execution times compared to traditional AMMs like Uniswap V2 or V3.
However, the study also revealed discrepancies across different solver-based platforms. For instance, CoWSwap’s batch auction design leads to longer delays in execution times, which can be detrimental in volatile markets. On the other hand, 1inchFusion’s approach to using professional market makers (PMMs) seems to provide more consistent price improvements.
The researchers also identified potential inefficiencies due to solver market structure and variations in liquidity profiles among solvers. This highlights the need for further development and optimization of these platforms.
One significant factor not accounted for in this study is the impact of token incentives on solver behavior. Solvers often receive rewards in the form of tokens, which can influence their decision-making process and potentially affect trade execution outcomes.
The findings of this study provide valuable insights into the workings of solver-based DEXes and highlight areas for improvement. As these platforms continue to evolve, it is essential to prioritize transparency, efficiency, and fairness to ensure a smooth trading experience for users.
In summary, solver-based DEXes have shown promise in enhancing trade execution outcomes, but their effectiveness depends on various factors, including platform design and market conditions. Further research and development are necessary to unlock the full potential of these innovative trading platforms.
Cite this article: “Unlocking Efficient Trade: A Comparative Analysis of Solver-Based DEXes on Execution Welfare”, The Science Archive, 2025.
Decentralized Exchanges, Solver-Based Dexes, Trade Execution, Automated Market Makers, Amms, Cowswap, Uniswapx, 1Inchfusion, Liquidity Profiles, Token Incentives
Reference: Yuki Yuminaga, Dex Chen, Danning Sui, “Execution Welfare Across Solver-based DEXes” (2025).
