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Request for Quote (RFQ) Meaning

In a technical "DeFi" context, RFQ systems are an alternative to Automated Market Makers (AMMs). While an AMM uses a math formula to set the price, an RFQ uses a price feed from a professional market maker.

This is increasingly popular for high-value swaps where the "Slippage" on an AMM would be too high for an institutional client.The DeFi RFQ flow involves a user sending a request to a relayer, and market makers responding with Signed Quotes. The user’s wallet selects the best quote and submits it to a smart contract.

The contract then verifies the signature and the price before executing the swap. This "Off-chain Pricing, On-chain Settlement" model combines the speed of professional trading with the security of the blockchain.The strategic benefit of RFQ is "MEV Protection." Because the price is locked in between the user and the market maker, there is no "Price Gap" for an arbitrage bot to exploit (known as a Sandwich Attack).

This makes RFQs the preferred choice for aggregators when they are handling large trades for retail or institutional clients who want the most price-efficient execution possible.

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