The Smart Order Router (SOR) is the component of Wavelength’s technology stack whose purpose is to find the best possible prices for traders. For any given trade, the SOR finds the optimal path to take in order to minimize slippage. This path can vary from a single/direct swap to multiple “hops” (trades) in multiple pools.
Single Swap & Multi-hop
Utilize All the Liquidity!
As the number and diversity of Wavelength pools grow over time, the SOR becomes powerful/effective too!
With no SOR, a greater number of pools results in fragmented liquidity, and in turn, higher slippage. However, with the SOR traders accessing every pool’s liquidity every time they swap. Also, the SOR is especially beneficial for users who trade more exotic alt-coins, because these tokens tend to have less liquidity available in each pool.
In essence, this particular piece of technology allows every single dollar in any of Wavelength’s pools to contribute to all trades occurring, as long as adding a certain hop proves capable of reducing slippage.
How It Works
The optimization mechanism finds the path through a set of Balancer Pools with the greatest output (after gas costs).