DeFi Trading Infrastructure Goes Modular

Decentralized exchanges (DEXs) are evolving as trading infrastructure goes modular, unbundling traditional exchange functionality. This shift is driven by traders demanding more advanced features like limit orders, automated strategies, and gasless transactions alongside basic token swaps.

The first generation of automated market makers solved the problem of liquidity on DEXs, but this alone is no longer sufficient for a complete trading experience. Traders need execution logic that connects their desired outcome with the final transaction, which can involve multiple smart contracts, wallets, liquidity pools, and blockchain networks at once.

Modularity is already a defining trend in blockchain infrastructure, with different layers specializing in execution, settlement, or data availability. A similar shift is playing out in decentralized trading, where specialized infrastructure is handling routing, order automation, and execution while exchanges focus on the interface and access to liquidity.