1inch (1INCH) – All you need to know

What is 1inch?

1inch is a decentralised exchange (DEX) aggregator: it compares the prices of cryptocurrencies across several exchanges and helps its users find the best price. Think of it as a price comparison website for crypto that can conduct intelligent procedures to achieve the best prices for its users. This could involve swapping your tokens between multiple exchanges and different currencies to achieve the best end result. The 1INCH token is the platform’s native token; it runs on Ethereum and holders of it can vote on governance decisions.

The platform also has its own liquidity protocol similar to Uniswap and SushiSwap, and this is called Mooniswap. This protocol is an automatic market maker and allows the 1inch Exchange to work efficiently without the need for a centralised regulatory body. As of November 2020, when a major update to the platform called 1inch V2 launched, swaps were split between a total of 21 different decentralised exchanges, and this number is likely to increase in the future.

The aggregator is a relatively new business, being founded by Sergej Kunz and Anton Bukov in 2019. It has grown quickly, raising a total of around $15 million in funding from major firms like Binance Labs, Galaxy Digital, and Pantera Capital. DEXs remain at an early stage in their development, but 1inch has positioned itself as a necessary tool with a first-mover advantage should they continue to grow in popularity.

How does 1inch work?

1inch works by using adaptive procedures, which are tailored to each individual transaction, to funnel the funds of users through different decentralised exchanges and currencies to achieve the best exchange rates. Think of it as a sat nav that reacts to market conditions to reroute its users so they can reach their final destination more affordably. Users have to pay network fees to access the 1inch service but don’t have to pay any withdrawal fees.

Each transaction on Ethereum requires some gas: the fee paid to Ethereum miners (like Bitcoin miners) who validate transactions. Because there can sometimes be multiple transactions when using the 1inch exchange, there needs to be a mechanism in place to reduce fees. 1inch burns CHI tokens to almost half the gas fees of transactions, and CHI can be minted on the 1inch exchange.

The entire service is customisable, so if users have a particular exchange they would like to avoid, they can simply toggle it off in their 1inch preferences. By compiling a much larger list of exchange options, 1inch opens up a larger order book to consumers who previously had to deal with individual exchanges.


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