Dynamic Multi-Path Token Routing to Reduce Swap Slippage
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Solution Overview
Problem
Users transferring large volumes of blockchain-based cryptocurrency tokens often experience significant slippage due to fluctuating exchange rates and transaction fees, making it difficult to optimize the amount of destination tokens received.
Innovation Solution
A system for dynamic multi-path transfers that analyzes various exchanges and intermediate assets to determine the best routes for swapping source tokens, optimizing the volume of destination tokens received while accounting for transaction fees, using artificial intelligence and machine learning to quickly plan and execute complex multi-token and multi-exchange transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If a single exchange is used for token swapping, then the transaction is simple and fast, but the user experiences significant slippage and receives less destination token
Solution Approach 1:
The patent divides the token swap transaction into multiple smaller transactions across different exchanges. Instead of executing a single large swap that causes high slippage, the system segments the total amount into multiple portions and routes them through different exchanges simultaneously, reducing the market impact and slippage on each individual transaction while maintaining overall transaction speed.
Solution Approach 2:
The patent introduces the dimension of multiple exchanges and intermediate tokens into the transaction routing. By moving from a single-exchange direct swap to a multi-exchange multi-token path, the system adds routing complexity to optimize the exchange rate and minimize slippage, effectively using higher-dimensional routing space to achieve better pricing.
2Loss of energy
If multiple exchanges and intermediate tokens are used to optimize exchange rate, then the amount of destination token received increases, but the transaction complexity and planning time increase
Solution Approach 1:
The system performs preliminary analysis and planning before executing the transaction. It pre-calculates optimal routing paths by analyzing multiple exchanges and intermediate tokens, determines the best split of transaction amounts, and prepares execution strategies in advance. This preliminary action reduces the complexity burden during actual execution and enables optimized multi-path routing.
Solution Approach 2:
The patent introduces intermediary tokens as mediators in the exchange path. Instead of direct swapping, the system uses intermediate tokens to bridge different exchanges and optimize the overall exchange rate. These intermediary tokens facilitate multi-hop routing and allow the system to leverage favorable exchange rates across different token pairs to minimize slippage.
3Loss of energy
If the transaction is executed quickly to capture current exchange rates, then the exchange rate optimization is maintained, but there is less time to analyze and plan the optimal multi-route transfer
Solution Approach 1:
The system performs rapid preliminary analysis of exchange rates, transaction fees, and routing options before execution. By pre-calculating optimal paths and preparing execution parameters in advance, the system minimizes the planning time required during execution while still capturing current market conditions. This preliminary action enables fast execution without sacrificing optimization quality.
Solution Approach 2:
The patent implements dynamic routing that adapts to real-time market conditions. The system continuously monitors exchange rates and transaction fees, and dynamically adjusts the routing path and transaction split based on current market data. This dynamic approach allows the system to execute quickly while maintaining optimization, as the routing decisions are made in response to current market state rather than static pre-planned paths.
4Ease of operation
If large volume transactions are executed directly, then the transaction is simple, but the user loses substantial fraction of total amount to slippage
Solution Approach 1:
The system segments large volume transactions into multiple smaller transactions across different exchanges. By dividing the total amount into multiple portions, each transaction has reduced market impact and experiences lower slippage. The segmentation principle allows the system to maintain simplicity from the user perspective while dramatically reducing substance loss through optimized routing.
Solution Approach 2:
The patent creates multiple copies of the transaction path through different exchanges and intermediate tokens. Instead of a single direct swap path, the system generates multiple parallel routing paths that can be executed simultaneously. This copying approach distributes the transaction volume across multiple paths, reducing slippage on each path while maintaining overall transaction simplicity through automated parallel execution.
Data Source
AI summary
Systems and methods for determining and executing complex multi-route transfers of digital assets are described. A multi-route transfer of a source asset for a destination asset may be determined by analyzing a graph representing a plurality of assets and exchanges to determine a plurality of unique transfer paths. A transfer path may reflect a direct transfer in which the source asset is swapped for the destination asset, or it may reflect a series of intermediate transfers in which the source asset is swapped for intermediate asset(s) that are swapped for the destination asset. Dynamic programming can be used to select the transfer paths to include in the multi-route transfer, how to distribute swaps across those transfer paths, and how to distribute swaps for each transfer of a transfer path—thereby optimizing for the total amount of the destination asset received while accounting for transaction fees.