CoinMarketCap takes a deep dive into a DEX aggregator protocol, named 1inch Network (1INCH), that helps its users in finding the most profitable platforms among different blockchain networks.
1inch Network is a DEX aggregator designed to scrape through a handful of decentralized exchanges in search of the most profitable platforms for liquidity providers. It offers its users access to 116 sources available on the Ethereum ecosystem, Binance Smart Chain, and the Polygon Network.
1inch Network’s aggregation protocol utilizes a wide range of algorithms to perform its function, giving users access to liquidity sources worth over $30 billion.
| KEY TAKEAWAYS: |
| — Although centralized crypto exchanges offer an easy way to trade your crypto assets, their central infrastructure keeps them exposed to constant risk. This is why decentralized exchanges are becoming increasingly popular among crypto users. — However, the rates of the same crypto assets across different DEXs can differ considerably. This is why it is a common practice among crypto users to explore multiple DEXs to find the best swap rates for their tokens. — As is obvious, this is a time-intensive process. To simplify this, let’s introduce 1Inch — the DEX aggregator that spans across almost 120 DEXs on Ethereum, Polygon, Binance Smart Chain, Optimistic Ethereum and Arbitrum. Users can easily find and swap their tokens at the best swap rates using 1inch. — In this article, let’s delve into what is 1inch, what inspired the need for this DEX aggregator, and how you can use 1Inch in the safest way? |
Table of Contents
Who Created 1inch Network?
1inch was founded by Surjey Kunz and Anton Bukov during the ETHGlobal New York hackathon in May 2019, built on the Ethereum blockchain. The pair had previously entered hackathons together, winning awards along the way.
Prior to this endeavor, Sergej Kunz had a wealth of experience in programming and development. He was a senior developer at Commerce Connector, coded for Herzog agency, directed projects with Mimacom consultancy, and worked in both DevOps and cybersecurity roles at Porsche.
With nearly two decades of experience in software development and five years specialized in decentralized finance (DeFi), Anton Bukov has become a seasoned expert, contributing to projects like gDAI.io and NEAR Protocol.
In August 2020, 1inch received $2.8 million in funding from Binance Labs, Galaxy Digital, and several other firms before raising a further $12 million in December from prominent firms including ParaFi Capital and Pantera Capital. A year later, 1inch received $175 million in another funding round led by Amber Group.
How Does 1inch Network’s (1INCH) Work?
1inch Network operates as a DEX aggregator, much like popular travel booking websites, which aggregate prices from various providers. It compares cryptocurrency prices and trading fees across several decentralized exchanges (DEXes), automating the process of finding the best rates and lowest fees for users. 1inch Network is achieved through its aggregation protocol, which employs the Pathfinder algorithm. Pathfinder evaluates numerous swap possibilities on one or multiple DEXes to secure the best price, often splitting trades across different platforms to optimize cost-efficiency.
A key feature of 1inch is its ability to automatically route trades to the most advantageous platforms, considering both price and transaction fees. For example, a user wishing to exchange DAI for Ether might find their trade split between different exchanges like 0x and Balancer to minimize costs. This seamless process occurs behind the scenes, providing a single transaction experience for the user.
The platform’s central proposition is its speedy and efficient trade execution. Utilizing its advanced algorithm across over 80 decentralized exchanges, 1inch negates the need for time-consuming, individual exchange comparisons. This efficiency also addresses the issue of slippage – the price movement between transaction confirmation and execution – which is a common challenge in volatile crypto markets. By distributing trades across multiple liquidity pools, 1inch enhances pricing transparency and accuracy.
Moreover, 1inch reduces transaction costs by finding trading routes with lower gas fees while maintaining high returns, and ensures security as a non-custodial platform, keeping users’ funds tied to their private keys.
In 2022, 1inch expanded its capabilities with the introduction of Fusion, a feature aimed at eliminating gas fees and reducing front-running risks. Fusion swaps, processed as limit orders through a Dutch auction mechanism, are facilitated by resolvers who pay the gas fees. This is particularly beneficial on congested networks like Ethereum’s mainnet.
Besides the aggregation protocol and Fusion, 1inch also offers a limit order protocol, allowing users to set specific prices for their swaps, and RabbitHole, which mitigates front-running risks by routing swaps through third-party validators.
In summary, 1inch streamlines the process of cryptocurrency trading across multiple DEXes, offering users a more efficient, cost-effective, and secure trading experience. Its innovative approach to aggregating trades, reducing slippage, and addressing common DeFi challenges positions it as a leading platform in the cryptocurrency exchange domain.
What Does 1inch Network’s (1INCH) Offer?
By far, one of 1inch Network’s biggest advantages is the liquidity it provides across multiple markets on three blockchain networks. It offers an efficient method for DeFi enthusiasts to have access to billions worth of liquidity. Investors can also get a chance to earn rewards by participating in its liquidity mining programs.
What Is The 1inch Network Token (1INCH)?
1INCH is an ERC-20 token designed to serve as a governance and utility token for the 1inch ecosystem.
1INCH Token Price?
At the time of writing, the price of 1INCH is set at $2.8.
Where Can You Buy 1INCH Token?
You can buy 1INCH tokens on several exchanges, including Binance, Coinbase, Uniswap, KuCoin, Gemini, and PancakeSwap.
When Will 1inch Network (1INCH) Hit $10?
At the moment, the price of 1INCH has plummeted together with the rest of the crypto sphere led by Bitcoin. With a daily trading volume of over $400 million, the price of 1INCH token can hit a $10 price mark if its market capacity reaches 2.5 billion. Recently there have been signs of a market recovery. If the rest of the market bounces from its lower resistance levels according to technical indicators, 1INCH could likely revisit its all-time high price of about 7$ and maybe even surpass the $10 mark.
In A Nutshell
1INCH comes with a multitude of features including an innovative governance model that aims to reshape how decentralized networks are managed. 1inch Network’s ERC-20 token with a market capitalization of about $500 million delivers sufficient access to liquidity and offers traders and liquidity providers a profitable and cost-efficient service.
The aggregation protocol that factors in gas fees
By utilizing 1inch, traders have the convenience of trading from a single platform while being exposed to the lowest trading fees and best prices across several DEXs. Their Pathfinder product not only finds the top trading routes across several markets but also considers gas fees. The aggregation protocol will automatically factor in the gas fees when establishing the best price routes.
For instance, the complex protocol can break down single trades across multiple DEXs in order to provide the best market price. Finding the most efficient swapping routes might include converting a cryptocurrency to a stablecoin and then finding the best crypto prices across multiple exchanges (factoring in low trading fees) before executing the original trade. 1inch takes care of the complex backend routing processes while the trade effectively executes one trade at the best price.
The liquidity protocol for liquidity providers
The platform’s liquidity protocol incorporates a next-generation automated market maker (AMM) that not only provides impressive opportunities for liquidity providers but also protects users from front-running attacks typically associated with liquidity pool trading.
The liquidity protocol allows users to earn passive income from depositing their cryptocurrencies into the relevant liquidity pools and earning LP tokens in return. LP tokens can be staked or exchanged, while the cryptocurrencies in the liquidity pools can be used for transactions made by liquidity providers utilizing the 1inch exchange, a decentralized exchange.
To engage in the liquidity protocol or the 1inch exchange, users simply need to connect their wallet and select the liquidity pool (trading pair) they wish to provide liquidity. Additionally, as the decentralized exchange aggregator does not store any crypto assets on its server, users are never required to pay a withdrawal or deposit fee when using the 1inch exchange services.
The limit order protocol for decentralized exchanges
Considered one of the “most innovative and flexible limit order swap opportunities in DeFi” 1inch’s limit order protocol allows traders to place more advanced, conditioned orders to automatically guarantee their profits at certain prices or avoid losses.
Alongside the flexible limit order functionality, the protocol also offers features such as dynamic pricing, extra RFQ support, and powers various implementations.
Security and Ownership of Your Keys
Just in case you’d forgotten, let’s say it again: not your keys, not your coins.
One of the key benefits of using 1inch is that you retain full ownership of your coins while you trade. As a non-custodial platform, using 1inch means your funds will always be tied to your own private key, and not that of the exchange. This empowers you with maximum control and security while you’re exchanging.
What is the 1INCH token?
The 1INCH token is an ERC-20 token that serves as a utility and governance token for the platform. On top of functions like spending, sending, holding, and staking, the 1inch token also provides voting rights to token holders on any proposed updates to the protocol.
How is the 1INCH token used?
The 1INCH token, integral to the 1inch Network, functions as both a utility and governance token across multiple smart contract chains. Released in December 2020 with 6% of tokens initially unlocked, 1INCH plays a vital role in the platform’s ecosystem.
In terms of utility, within the Fusion mode of 1inch, 1INCH tokens are staked by parties called “resolvers.” They deposit these tokens into a “feebank” contract, thus becoming eligible for processing swap transactions on the platform. This staking mechanism is crucial for the efficient functioning of the Fusion feature, which aims to reduce gas fees and minimize front-running risks in swap transactions.
On the governance side, holding 1INCH tokens empowers users with voting rights within the 1inch Decentralized Autonomous Organization (DAO). This aspect of the token grants its holders a significant say in the platform’s future directions and decision-making processes. The 1INCH DAO is a decentralized entity that steers the platform, ensuring that it evolves in alignment with the community’s interests.
The distribution of the 1INCH token was strategically planned, with a maximum supply of 1.5 billion tokens. These were allocated as follows: 33% to backers and investors, 30% to community incentives, 22.5% to core contributors, and 14.5% to the network growth fund, with complete distribution scheduled by the end of 2024.
Users interested in joining the 1INCH DAO can do so by acquiring 1INCH tokens, connecting their wallets to the 1inch dapp on the Ethereum network, and staking their tokens. Upon staking, users receive Unicorn Power, a unique measure within the platform, which they can delegate to earn rewards.
In summary, the 1INCH token is a cornerstone of the 1inch Network, serving dual roles in utility and governance. It enables participation in the Fusion protocol and grants holders a say in the platform’s direction through the 1INCH DAO. The token’s strategic distribution underscores its importance in the network’s growth and community engagement. As 1inch continues to evolve, the role of the 1INCH token in facilitating transactions and empowering users remains central to its ecosystem.
How can I buy the 1INCH token?
Users can easily incorporate the 1INCH token into their portfolio through the Tap app’s secure platform. The easy method allows anyone with an account to engage in an effortless trading experience using both cryptocurrencies and fiat currency.
Tap into the 1inch ecosystem by opening an account and loading your preferred wallet, then simply execute the trade to buy the 1INCH token. The tokens can then be held in the integrated wallet or used on the 1inch exchange platform or liquidity pools by completing a simple transaction. All you need to do to get started is download the app and create an account.
How to Use the 1inch Interface
If it’s your first time using the 1inch interface, you might be wondering how to approach it – you are not alone! Let’s take a walk through the various features of the interface and how you can use them to benefit your own trades.
To begin with, let’s look at the homepage. Let’s say you want to exchange ETH for Aave: you select ETH in the pay box, and AAVE in the receive box.
The algorithm will automatically generate the best deal for this trade, which you can then prioritize. Be it by lowest gas fee or by highest return – using the two buttons at the bottom of the control panel.
On the left of the screen, the interface shows what you would have paid for the same deal on other exchange platforms. This allows you to compare your deal easily.
You’ll notice that the exchange dashboard shows the transaction cost within the breakdown of your exchange:
This is your gas fee, and no matter what you’re swapping, you’ll also need enough ETH in your wallet to cover this cost.
Once you’ve had a chance to inspect all elements of your deal and are happy with what you’ve found, hit the “swap token” button. This will take you to a final screen, where any change in price will be shown to you before you confirm.
If you’re still happy with the deal you’ve found, it’s time to exchange!
Time to Exchange With 1inch
Platforms like 1inch contribute to the betterment of the overall DeFi user experience. Not only by enabling you to find the most favorable conditions for your token exchanges, but by further decentralizing (and better distributing) control and transparency among regular crypto users.
With 1inch spanning a vast array of DEXs across three major blockchains – and showing no sign of slowing down – it seems the DEX aggregator may well be delivering the knock-out blow it was aiming for.
Is 1inch Network a good investment?
The 1INCH token’s voting and proposal features could be useful for those interested in influencing the future development of the 1inch protocol.
The 1INCH token may be attractive to investors who think the 1inch team can keep growing its user base, as it may eventually be able to be used for more purposes within the 1inch ecosystem.
Is 1inch Network safe?
To ensure that users’ funds in swaps on other DeFi protocols remain safe, 1inch employs cutting-edge security measures. One of its claims to fame is that it serves as “your decentralised financial shield.” As an added bonus, it brags about being the most audited project in DeFi.
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