1inch is a cryptocurrency trading tool for traders, allowing them to quickly find and access competitive prices on decentralized exchanges (DEXs) using its innovative 1INCH token, which provides both utility and governance functionalities to token holders.
What is the 1inch network?
The 1inch network is a decentralized exchange aggregator that assists crypto traders in finding the best prices and lowest fees for their transactions within the DeFi (decentralized finance) sector of the cryptocurrency market.
Decentralized exchanges use self-operating smart contracts to enable trades between buyers and sellers, utilizing a non-custodial infrastructure. This allows for seamless transactions while maintaining the utmost security of funds.
While these exchanges offer heightened security, this does not always lead to heightened liquidity, which can result in what is called slippage. This is where there is a discrepancy between the expected price of a trade and the actual price once executed. The 1inch protocol helps to avoid this problem and other market inefficiencies by joining together trading activity from multiple markets and combining liquidity.
In essence, the DeFi space is notorious for fast-changing prices and transaction fees for crypto assets, and 1inch solves this problem. Instead of traders having to manually resource and compare prices across DEXs, the 1inch network gathers real-time pricing data, including gas fees, from several top exchanges and presents this information to the trader. These exchanges include the likes of 0x, SushiSwap, Uniswap, and Kyber Network.
The network is fueled by the 1INCH token and ERC-20 token that provides governance rights and participation in the network's expansion. The token serves as both a utility token and a governance token on the network allowing holders to vote on key protocol parameters.
Who created the 1inch platform?
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 the 1inch Protocol work?
In its most basic form, 1inch operates in a similar way to prevalent travel booking sites in that the protocol collects and compares crypto prices and transaction fees from several decentralized exchanges. The platform uses three prominent protocols: the aggregation protocol, the liquidity protocol, and the limit order protocol.
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.
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 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.
This article is for general information purposes only and is not intended to constitute legal or other professional advice or a recommendation of any kind whatsoever and should not be relied upon or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations or undertakings about any of the content of this article (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content), or any content of any other material referred to or accessed by hyperlinks through this article. We make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up-to-date.