1inch is an exchange aggregator that determines the best rates of decentralized exchanges scanning the prices across numerous DeFi facilities. Thus, members of the community can be sure that they always find the best deal when working with the 1inch network. The resource is hosted on the Ethereum blockchain.
1inch DEX has solved the problem of liquidity aggregating it while dealing with different DeFi platforms. The platform effectively solves the slippage problem merging trading activity of several resources. This move helps to pool liquidity and reduce market inefficiencies down to a minimum.
The company is supported financially by such well-known companies as Binance, Labs, Pantera Capital, and Galaxy Digital. The resource has managed to raise 15 million USD from investors.
Thanks to the unique DEX aggregator solution, the exchange combines diverse liquidity sources that provide the lowest rates to users. Also, the technology incorporates the Pathfinder mechanism looking for better paths among over 50, 20, and 8 liquidity sources based on Ethereum, Binance Smart Chain, and Polygon correspondingly, which are supported by the exchange at the time of writing. The number of available protocols gradually increases as the protocol becomes more popular.
The DEX manages automatic market-making and employs virtual balances for the reduction of impermanent loss. The members of the community can participate in liquidity mining and deliver their assets by locking them in pools. This is how they can earn 1INCH, which is a native token of the facility given to liquidity miners as interest. The platform employs the same scheme used by the other DEX’s token, UNI.
The 2nd version of the 1inch protocol was launched in November 2020. With its assistance swaps were introduced on the resource. More complicated trades were added to keep prices low, for instance, rerouting funds reserved as collateral for DeFi lending platforms Compound and Aave.
1inch platform and its products
At the time of writing, traders can employ multiple liquidity sources on BSC, Ethereum, and Polygon. The facility draws data and liquidity of 0x, Uniswap, Balancer, and its own former protocol Mooniswap.
Being a governance token of the facility, 1INCH was distributed among users to make the platform fully independent and turn it into the DAO governing the facility. It’s worth mentioning that the form of 1INCH governance still differs from other decentralized facilities that also belong to DAOs. Named as ‘instant governance’, it allows introducing changes to the protocol faster. At this, there are no special voting rights as it happens on some platforms. All token holders are equal during the voting procedure.
Instant governance was introduced in December 2020. In June 2021, the system was complemented by 1inch Network Governance that features a clear approach to the introduction of protocol improvements and the voting issues.
The ecosystem of 1INCH also includes a utility token Chi Gastoken that is needed to pay for transactions. It was developed on the basis of Ethereum and pegged to the cost of gas. The tokens of the platform are very useful instruments for raising its efficiency. The traders using these tokens can take advantage of the discounts when they pay the transaction costs.
In April 2021, the team of the company released the 1inch wallet app for iOS-based devices. The app offers the functionality of the web app available for users on the go. In May 2021, the network’s swap API for Polygon was released that made transactions faster, cheaper, and more efficient. The main advantage of API is a low median response time below 400ms. It’s possible to integrate this API with any dApp or bot.
In June 2021, the 1inch Limit Order protocol started working. The in-house solution replaced the limit order functionality created on the basis of the 0x solution. A new move affected time execution and gas fees reducing these parameters considerably.
Also, over-the-counter trading (OTC) was introduced on the platform. With the OTC swap feature, the platform offers zero-slippage trades. There is competition between the market makers who try to offer the best swap price. Taking into account that users get fixed prices, it is usually a better average price. The co-founder of the platform Sergej Kunz commented that the feature was added after numerous inquiries about swaps without slippage.
As with any other decentralized platform, 1inch doesn’t offer custody of funds. However, 1inch partners with a Swiss bank Sygnum that enables investment in several most trustworthy DeFi tokens, and 1inch entered their number. In this way, the members of the community received access to a full suite of banking services, and custody of institutional level.
1inch wallet will implement the advanced support of NFTs in case of higher demand from users. There is no such demand for this feature at the time of writing as founders of the platform assured during the AMA (Ask Me Anything) session conducted in April 2021. Also, the founders revealed that the platform doesn’t publish its roadmap because it prefers to activate new features without announcements to make its users surprised.
In May 2021, the company added integration with Polygon, which is a layer 2 scaling solution for Ethereum. The expansion provides more opportunities for users who get access to a range of liquidity sources such as Aave, Curve, SushiSwap, and others.
The platform pays much attention to the security of the 1inch Aggregation Protocol and promises absolute safety regardless of the type of protocol used. It’s a challenging task since many DEXes neglect security issues, don’t conduct audits, and have numerous vulnerabilities. The protection of its clients from security threats is one of the key priorities of the protocol. The platform has passed all the required audits and guarantees the protection of users from potential vulnerabilities of decentralized platforms that participate in token swaps via 1inch.
The platform was founded by cryptocurrency enthusiasts and specialists in the sphere Anton Bukov and Sergej Kunz. The co-founders met each other during a hackathon that took place in 2019 in New York.
The company collaborates with ICHI, a protocol that creates Decentralized Monetary Authorities. As a result of cooperation, a new stablecoin was developed known as one1INCH used for transaction payments and rewards for stakers and traders providing liquidity to the platform.