Smart Order Routing (SOR) is an algorithm used by DEX aggregators to split a trade across multiple liquidity sources — different AMM pools, aggregators, and pri
Smart Order Routing (SOR)
Smart Order Routing (SOR) is an algorithm used by DEX aggregators to split a trade across multiple liquidity sources — different AMM pools, aggregators, and private market makers — to achieve the best overall execution price. The router solves an optimization problem: given the liquidity curves of N venues and a trade of size S, find the allocation across venues that minimizes the average execution price net of gas costs. This is a convex optimization problem for most AMM curves, solvable on-chain or off-chain quickly. SOR must account for gas costs (each additional pool hop adds base transaction overhead) and slippage (larger fractions to a single pool increase price impact). Advanced SOR systems like the 1inch Aggregation Protocol and UniswapX’s router incorporate RFQ quotes alongside on-chain liquidity and may split across multiple blockchain networks. SOR significantly improves execution for retail and institutional traders who would otherwise get worse prices executing against a single venue.
Related terms
Related articles
Newsletter
Get chaotic.markets updates and new data articles by email.
You confirm by email, and you can unsubscribe from any message. The list is kept by Kit.