Citation

Xu, H., Zhu, Y., Huang, Y., Tang, J. “PRIME: Efficient Algorithm for Token Graph Routing Problem.” arXiv:2603.08337v1 [cs.DB] (Mar 9, 2026). HKUST-GZ / NTU / NUS.

Core Problem

DEX aggregation and MEV arbitrage both require solving the Token Graph Routing Problem (TGRP): given a large, dynamic graph where tokens are vertices and exchange pairs are edges, find the optimal multi-hop routing path that maximizes output.

Existing solutions fail due to non-linear, concave swap functions (AMM price impact): edge weights change as you route through them, making standard graph algorithms inapplicable.

PRIME Algorithm

Two-stage iterative algorithm:

Stage 1: Pruned Graph Search

  • Identifies high-potential routing paths
  • Prunes low-probability paths early using heuristic bounds
  • Reduces the search space from exponential to tractable

Stage 2: Convex Optimization

  • Formulates the allocation task as a strongly convex optimization problem
  • Solved using Adaptive Sign Gradient Method (ASGM) with linear convergence rate
  • Finds optimal split ratios across multiple paths simultaneously

Empirical Results (Real Ethereum Data)

MetricPRIME vs. Uniswap Routing
Price improvement (large trades)+8.42 basis points
Computation reduction-96.7%
ValidationDeployed in hedge fund production

The 8.42 bps improvement is significant: for large trades, routing decisions alone can be worth millions of dollars annually.

Why This Matters for MEV

Arbitrage Bots

  • Multi-hop arbitrage cycles require solving exactly this routing problem
  • PRIME provides a more efficient algorithm → lower latency → competitive advantage in MEV races
  • The 96.7% compute reduction means PRIME can run many more simulations per second than current algorithms

DEX Aggregators

  • PropAMMs, 1inch, Uniswap v4 hooks all need optimal routing
  • PRIME improves execution quality for users → reduces the “bad execution” that creates MEV opportunities
  • Better aggregator routing → smaller residual arbitrage opportunities left on the table

Block Builders

  • Builders internally optimize transaction ordering and routing
  • PRIME-style algorithms improve the value of blocks that include complex arbitrage bundles

Connection to Existing Wiki