Fee-Aware Routing

Fee-aware routing is a mechanism in decentralized exchanges and automated market makers that optimizes transaction paths by factoring in network gas costs alongside price slippage. In high-congestion environments, a route with a better spot price may actually be more expensive once gas fees are added, making it less efficient than a slightly worse price on a cheaper path.

This routing logic calculates the total cost of ownership for a trade, ensuring that the net output for the user is maximized. It relies on real-time data regarding network congestion and liquidity depth to dynamically select the best execution path.

By integrating these costs, protocols reduce the burden on users who might otherwise overpay for trades on congested chains. This is a critical component of market microstructure, ensuring efficient price discovery even when base layer costs are volatile.