What is 1inch (1INCH)? | Learn

Introduced in May 2019, 1inch (1INCH) revolutionized the way we engage with decentralized finance (DeFi), specifically with exchanges. With a variety of decentralized crypto exchanges offering varying fees and rates, finding the most cost-effective options can be overwhelming. 1inch addressed this issue by creating a decentralized exchange aggregator that filters through all decentralized crypto exchanges, ensuring that investors can secure the best possible rates and fees. Let’s take a closer look at how 1inch simplifies cryptocurrency exchanges for its users.

What is 1inch?

1inch serves as a decentralized exchange (DEX) aggregator, a tool that allows users to access the best trading prices by comparing different exchanges. Rather than having traders manually search through the plethora of decentralized exchanges to find optimal rates, 1inch automates this process. It scans multiple platforms such as Ethereum, Binance Smart Chain, and Polygon, aggregating liquidity to ensure that users get the most favorable trading conditions.

For instance, if a user wants to swap Ether (ETH) for another token, 1inch will compare prices across various exchanges like Uniswap, SushiSwap, and others integrated into its network to find the best possible rate. This system enhances the efficiency of the market, making it easier and more cost-effective for users to execute trades.

How 1inch Works

1inch is designed to enhance the efficiency and cost-effectiveness of crypto trading by leveraging several key features:

Liquidity Aggregation: 1inch aggregates liquidity from top blockchain networks including Ethereum, Binance Smart Chain, and Polygon. This vast network access ensures that users receive the most competitive market prices available, making it easier to execute large trades without significant price impact. For example, if a user wants to buy Compound (COMP) using Ether (ETH), 1inch pools liquidity from multiple exchanges to ensure the trade can be executed at the best price possible.
Pathfinder Algorithm: The sophisticated Pathfinder algorithm scans various decentralized exchanges to pinpoint the best trading routes and prices for the user's desired crypto transactions. It evaluates potential combinations of different token swaps, not just direct exchanges. For instance, let’s use the same example as above. When a user wants to buy Compound (COMP) using Ether (ETH), Pathfinder might find that swapping ETH for USDC first, and then to COMP, offers better value after accounting for fees.
Advanced Trading Functionalities:
- Limit Orders: Allows traders to set and execute trades at desired prices, offering greater control over trading strategies.
- Cost Reduction Measures: 1inch significantly reduces transaction costs, particularly gas fees, which are a common challenge in Ethereum-based transactions. By optimizing the trade execution process to use less gas, it provides cost savings during periods of high network congestion.
Fusion Feature: This mechanism addresses and mitigates the risks of front-running, ensuring that transactions are processed fairly and securely. Fusion adjusts transaction processing to protect users from potential market manipulation, further reducing transaction fees in the process.

The Founders and Development of 1inch

1inch was co-founded by Sergej Kunz and Anton Bukov during the ETHGlobal New York hackathon in May 2019. Sergej Kunz, based in Stuttgart, Germany, previously worked in cybersecurity for Porsche and was an active content creator on the CryptoManiacs YouTube channel. Anton Bukov, formerly a smart contract developer for NEAR Protocol, has a deep understanding of blockchain technology and its potential. Since inception, 1inch has experienced significant growth and expansion, successfully raising $2.8 million in a 2020 funding round led by Binance Labs, followed by another $12 million from Pantera Capital and other venture capital firms.

By 2021, 1inch had expanded its reach across multiple blockchain networks, including Ethereum, Binance Smart Chain, and Polygon, and continued to integrate additional networks like Fantom and zkSync Era.

The 1INCH Token

1INCH is the native token of the 1inch Network. By holding 1INCH, users gain voting rights within the 1inch DAO (Decentralized Autonomous Organization), allowing them to participate in key governance decisions. Additionally, staking 1INCH tokens unlocks "Unicorn Power" (UP), which can be delegated to other DAO members to influence voting proposals.

The Future of 1inch (1INCH)

The 1inch protocol is a game-changer in the decentralized finance landscape. Providing an exchange aggregator for crypto users could be the moment for users to hop on board with these protocols, finding the optimal places to execute trades in real time and save on fees.

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DISCLAIMER

This article is for information purposes only. It does not constitute investment advice in any way. It does not constitute an offer to sell or a solicitation of an offer to buy or sell any cryptocurrency or security or to participate in any investment strategy.

iTrustCapital is a cryptocurrency IRA software platform. It is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not associated with and has no direct relationship with 1INCH. iTrustCapital is not affiliated with and does not endorse any particular cryptocurrency, precious metal, or investment strategy.

Cryptocurrencies are a speculative investment with risk of loss. Precious metals are a speculative investment with risk of loss. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Clients do not receive a choice of custody partner. The self-directed purchase and sale of cryptocurrency through a cryptocurrency IRA have not been endorsed by the IRS or any regulatory agency. Historical performance is no guarantee of future results.

Some taxes and conditions may apply depending on the type of IRA account. Investors assume the risk of all purchase and sale decisions. iTrustCapital makes no guarantee or representation regarding investors’ ability to profit from any transaction or the tax implications of any transaction. iTrustCapital does not provide legal, investment or tax advice. Consult a qualified legal, investment, or tax professional.

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