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  • Introduction to Unizen
    • Unizen Overview
      • Unizen Liquidity Distribution Mechanism (ULDM)
        • ULDM Performance
      • Unizen Interoperability Protocol (UIP)
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  • API - Introduction
    • Introduction
    • Before you get started
      • Understanding Price Impact and Price Slippage in Token Swaps
      • Token Allowance Management for Non-updatable Allowance Tokens
      • Tokens with taxes
      • Wrapping and Unwrapping Native Tokens
      • Quote expiration deadline
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      • Why disable CORS
      • How to integrate with a reverse proxy
    • Version 2 of our smart contracts
      • Migration to smart contract v2
  • API - GET STARTED
    • QuickStart guide
    • Swagger
    • Information endpoints
      • GET /trade/v1/info/chains
      • GET /trade/v1/info/sources
      • GET/v1/info/cross-providers
      • GET /trade/v1/info/token/search
      • GET /v1/info/token/popular
      • GET /trade/v1/info/token/{chainId}/{tokenAddress}
      • GET /trade/v1/info/tokenLogo/{chainId}/{tokenAddress}
      • GET /info/thorchain-inbound-address
      • GET /trade/v1/info/tx/{txHash}
      • GET /trade/v1/info/trade/{chainId}/{txHash}
      • GET /trade/v1/info/trades
    • Approval
      • GET /trade/v1/{chainId}/approval/spender
      • GET /trade/v1/{chainId}/approval/transaction
      • GET /trade/v1/{chainId}/approval/allowance
    • Single-Chain Swap
      • GET /trade/v1/{chainId}/quote/single
      • GET /trade/v1/{chainId}/swap/single
      • Send transaction in evm chains
      • Send transaction in Solana
    • Cross-Chain Swap
      • GET /trade/v1/{chainId}/quote/cross
      • GET /trade/v1/{chainId}/swap/cross
      • Send transaction
    • Gasless orders
      • POST /trade/v1/gasless/typed-data
      • POST /v1/gasless/estimate
      • POST /v1/gasless/create
      • POST /v1/gasless/cancel
      • GET /trade/v1/gasless/status/{orderId}
      • GET /v1/gasless/orderByAddress/{address}
    • UTXO Assets and Cosmos Swap
      • GET /trade/v1/{chainId}/quote/cross 1
      • GET /trade/v1/{chainId}/swap/cross
      • Sending transactions
    • Efficient Quote Retrieval with Batch Processing
      • GET /trade/v1/{chainId}/batch_quote/single
    • Error Messages
  • GASLESS TRADES
    • Obtaining gasless quotes
    • Gas estimation
    • Executing the trade
    • Following the orders
  • On-Chain Contracts - Get Started
    • Integration with Unizen Contracts for Token Swapping
    • Registering Errors on Smart Contract Calls
  • PERMIT2
    • What is Permit2?
    • Usage in our api
  • WIDGET - Get Started
    • Embed the Unizen Widget
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  1. Introduction to Unizen
  2. Unizen Overview

Unizen Liquidity Distribution Mechanism (ULDM)

Minimizing Slippage in Decentralized Trading

PreviousUnizen OverviewNextULDM Performance

Last updated 9 months ago

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Introduction The Unizen Trade Engine is a decentralized platform that enables users to trade digital assets across multiple blockchains and decentralized exchanges (DEXs) without worrying about the complexities of different protocols and platforms. One of the platform's key features is the Unizen Distributed Liquidity Mechanism (ULDM), a unique liquidity aggregation and routing system designed to minimize slippage in decentralized trading.

Slippage in Decentralized Trading

In decentralized trading, slippage is a pervasive issue due to the fragmented liquidity across multiple decentralized exchanges (DEXs). When a trader places an order on a DEX, the price of the asset can fluctuate due to market movements or the impact of the trade itself. This results in slippage, where the final execution price deviates from the expected price.

Unizen Liquidity Distribution Mechanism (ULDM)

Unizen addresses slippage through its advanced Unizen Liquidity Distribution Mechanism (ULDM). ULDM is a sophisticated system that integrates Smart Liquidity Routing and a custom trade splitting algorithm to optimize trade execution across fragmented liquidity pools.

Smart Liquidity Routing

Smart Liquidity Routing is a dynamic mechanism that scans multiple DEXs to identify the best available liquidity. The routing algorithm considers factors such as liquidity depth, price impact, and transaction costs to determine the optimal path for trade execution. This ensures that trades are executed at the most favorable price by leveraging the optimal liquidity sources.

Trade Splitting Algorithm

The trade splitting algorithm minimizes slippage by dividing larger orders into smaller fragments, which are then executed concurrently across multiple DEXs. Advanced statistical models are used to determine the optimal split strategy, minimizing the price impact of each fragment. This parallel execution ensures that large trades do not significantly affect the market price.

Private Market Maker (PMM) Liquidity Integration

A recent enhancement to ULDM is the integration of Private Market Maker (PMM) liquidity. This integration allows Unizen to interface with multiple MM orderbooks and settle transactions on-chain. By incorporating PMM liquidity, ULDM can now simultaneously split and route trades across both private MM orderbooks and AMM liquidity pools, significantly improving trade outcomes, especially for deep liquidity pairs like ETH and USDT.

Conclusion

Unizen's ULDM is a robust solution addressing slippage in decentralized trading. By combining Smart Liquidity Routing, a custom trade splitting algorithm, and PMM liquidity integration, ULDM enhances trading efficiency and execution precision. This advanced mechanism ensures that trades are executed at the best possible price while minimizing slippage, providing a superior trading experience across multiple blockchains and DEXs.

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ULDMv3.2