LI.FI is a multi-chain liquidity aggregation platform that connects decentralized applications (dApps) with various liquidity sources, including bridges, decentralized exchanges (DEXs), and solvers. This architecture enables seamless cross-chain and same-chain trading by facilitating price discovery, smart order routing, and efficient execution.
Function: What the end-user interacts with. dApps initiate quote requests and route selection to LI.FI’s backend (BE).
Process: A user sends a request from the dApp for the best trading route or quote, which is forwarded to LI.FI BE for processing. Once the optimal route is selected, the dApp submits a transaction to execute the trade.
2. LI.FI Backend (BE) - Aggregation and Routing Layer
Purpose: This off-chain layer performs core price discovery and smart order routing by interfacing with various liquidity sources.
Functionality:
Fetch Pricing: LI.FI BE retrieves quotes from multiple sources, including bridges, DEXs, and solvers, to determine the best price and route.
Return Quote: Once the optimal route is identified, LI.FI BE returns the quote to the dApp.
Order Routing: The dApp submits the transaction with the selected route, which LI.FI BE processes by routing it to the LI.FI Diamond Contract on-chain.