ParaSwap's Edge

Why using ParaSwap can be more effective than interacting directly with DeFi services

This page summarizes the main benefits you can draw from using ParaSwap's over interacting with decentralized finance services directly or using another middleware.

🧭 Efficient Decentralized Exchanges Aggregation

ParaSwap scours dozens of decentralized exchanges to secure the best exchange rates. Thanks to a refined pathing analysis, all options are explored, including splitting your order into several exchanges or looking for alternative swapping routes.

Find the Best Rate

ParaSwap connects to most major decentralized exchanges, such as Uniswap, Kyber, Curve or the 0x network.

When you input a trading pair on ParaSwap, for instance, ETH to DAI, ParaSwap compares the available rates for the pair on each exchange (accounting for your transaction's volume).

ParaSwap examines the rate for the given pair on all supported exchanges and displays the effective rate (accounting for slippage) for each.

Optimize Orders' Execution

ParaSwap does whatever it takes to find the best rate - including splitting your order across several decentralized exchanges.

Splitting orders is particularly effective for large transactions, such as the one presented here: a swap of 500 ETH to DAI, routed on three supports: 1. 40% ParaSwapPool, 2. 40% Uniswap V2, 3. 20% Kyber.

An order splitted on 3 exchanges with ParaSwap

🔀 MultiPath: Streamlined Interactions with DeFi

Multipath is ParaSwap's secret sauce enabling it to consider indirect trading routes (2+ hops) and seamlessly interact with various decentralized services, such as lending platform like Aave or Compound

No Stones Left Unturned

ParaSwap routing algorithm explores every relevant path, including the ones involving extra hops. For instance, to buy ETH from USDT, a direct USDT -> ETH swap might not be the way.

Getting the best rate might involve going USDT -> USDC -> ETH in that case. No need to compute all this complexity (across all DEXes) by yourself - ParaSwap does it for you!

A large USDT -> ETH swap routed through MultiPath to beat the rate available on any given DEX.

Here, this large transaction is routed through DAI and on 2 exchanges to achieve the best rate possible.

Interactions Aggregation

MultiPath can also help you interact with several services and smart contracts in one gas-efficient transaction. For instance, if you'd like to swap ETH to SNX and then deposit the SNX into Aave for aSNX, ParaSwap can do this for you in one step:

Direct interaction with Aave's contracts using ParaSwap

In the example above, the ETH-> SNX trade is first split between SushiSwap and Uniswap to reduce slippage. Then, the SNX tokens obtained are deposited on Aave and represented by the aSNX tokens obtained. Aggregating several interactions in one transaction like this one helps increase gas efficiency.

⛽ Gas Optimizations

ParaSwap implements several solutions to reduce gas usage across the platform, such as implementing the GST2 gas token. Gas costs are taken into account when analyzing swapping paths.

⛽ EtherScan Gas Tracker.

You can check the current status of the gas market using ⛽ EtherScan Gas Tracker.

Every trade made on ParaSwap is settled on the Ethereum network and incurs a gas cost paid to the miners to verify and broadcast the transaction. The gas price (chosen by the person submitting the transaction) influences the time required for the transaction to be validated.

If the gas price is too low, a transaction might never be incorporated into a block.

The Gas Token (GST2) enables the tokenization of gas when prices are low. The GST2 previously minted are then harnessed to reduce the effective gas costs when the Ethereum Network is most busy.

The gas costs estimations displayed on ParaSwap.io are a worst-case scenario. Often, effective prices are better. While GST2 can be harnessed to optimize your trade, ParaSwap refunds you the gas cost saved.

📡 ParaSwapPool

On top of all major DEXes, ParaSwap has its private Market Maker pool. ParaSwapPool provides further opportunities to optimize the transactions, sometimes enabling our users to beat the market rate.

ParaSwap pools the liquidity provided by professional liquidity providers in the ParaSwapPool. This pool is included in any relevant trade, just like another decentralized exchange.

🛂 Streamlined Allow Transactions

With ParaSwap, one Allow rules them all! Once you've allowed a given token on ParaSwap, you can exchange it on any DEX (through ParaSwap) - no further allow required!

Not familiar with Allow transactions? Read this 👇

When interacting with a DeFi service never used on a given wallet before, a specific transaction is required to enable tokens to be spent or moved around: Allow. The transaction must be repeated for each token spent/traded, and on each new service.

Since ETH is the base asset of the Ethereum network, it is the only asset that does not require an Allow transaction to be spent or utilized.

Allow once and for all

With ParaSwap, you still need to perform the Allow for any new token you interact with. However, once you've allowed the ParaSwap contract, you'll be able to trade your tokens on any DEX - including potentially new DEXes added after your first trade.

🛡️ Understanding Risk & Hedging It

ParaSwap follows a strict procedure to reduce operational risk. ParaSwap never holds custody of your assets. For further insurance, you can also contract a cover on Nexus Mutual.

Since ParaSwap is a middleware, your funds are only exposed while a transaction is being processed. ParaSwap never holds custody of your assets - you stay in full control.

As of Friday, Oct 09, a total of $4M were staked on ParaSwap's contract. Source: NexusTracker

While being a middleware reduces the scope of risk, it doesn't eliminate it. The main operational risk lies in the failure of one of ParaSwap's contracts. We implement several solutions to hedge for this risk:

  1. ParaSwap's contracts are audited. New versions go through a thorough audit process before being released.

  2. Any user can subscribe to insurance covering the risk of a technical failure of ParaSwap's contract using Nexus Mutual.

  3. To minimize the risk exposure, ParaSwap only integrates with services following thorough security practices.