Multi-Hop Swapping

Multi-Hop Swapping is a trading strategy where an asset is converted through one or more intermediate tokens to reach the final desired asset. This is often necessary when there is no direct liquidity pool for the specific trading pair, or when the indirect path offers better pricing due to deeper liquidity.

The process involves executing multiple sequential swaps, often automated by a smart contract to ensure atomic execution. While this can increase the total gas cost, the improved price execution often offsets the extra fees.

Multi-hop swapping is a standard feature in modern decentralized exchanges and aggregators, significantly enhancing the overall liquidity available to traders. It is a powerful tool for navigating fragmented markets and achieving better capital efficiency.