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What is 1inch Exchange? Beginner's Guide

What is 1inch Exchange? Beginner's Guide

In Brief

DEX aggregator is the main product of 1inch, which finds the best crypto prices on many decentralized exchanges.

In December 2020, the network will introduce its governance token, 1INCH.

An exchange that doesn't need a third party to govern it is known as decentralized exchange (DEX). After all, the name of the decentralized exchange should give you a hint: on a decentralized exchange, order books, funds custody, and decision-making authority are all decentralized.

To use a decentralized exchange, you only need to connect your wallets and never give up access to your money or personal information.

Uniswap, SushiSwap, and PancakeSwap are just a few examples of food swaps like this. To be sure, each of the relatively new and uniquely constructed exchanges offers cryptocurrencies for sale at a little different cost (incidentally, creating opportunities for arbitrage). As a result, the price of Ethereum on Uniswap and 0x may be significantly different, as may the fees.

If only there was a method to figure out how to get the greatest price on a decentralized trading platform! There is, and it's called 1inch.

Definition of 1 Inch

First and foremost, 1inch is a DEX aggregator platform. Decentralized exchanges are scraped by this service for the cheapest pricing and consumers' trades are routed across them to guarantee that they are getting the best price possible.

Users will have access to approximately 50 liquidity sources on Ethereum, 20 Binance Smart Chain** sources, and 8 Polygon sources through 1inch by June 2021. Uniswap, 0x, Balancer, and 1inch's liquidity protocol, formerly known as Mooniswap, are among the DEXs it uses.

ETHNewYork's hackathon in 2019 led to Sergej Kunz and Anton Bukov forming the company 1inch. About $15 million has been raised since then from firms such as Binance Labs, Galaxy Digital, and Pantera Capital for the 1inch project. 1inch's exchange trades roughly $250 million per day as of June 2021.

What is the Function of 1Inch?

What if, on a decentralized exchange, you wanted to buy some wrapped bitcoins (a synthetic form of bitcoin) for ethereum? The costs and prices of DEXes vary widely.

The 1inch algorithm identifies the most cost-effective way to execute that trade by utilizing all of the available exchanges and liquidity protocols.

In order to get the best price for your Ethereum, you may need to exchange it for a variety of currencies and protocols before it gets at Wrapped Bitcoin. Buying Wrapped Bitcoin at a lower price may be a benefit of doing this.

Description of 1INCH Token

1inch plans to introduce its own cryptocurrency, the 1INCH token, on Christmas Day, 2020. If you want to have your say on how the 1inch platform is run, you can use this as a "governance token." "Instant governance" was the term used by 1inch.

At the end of 2020, 1inch delivered a large number of tokens in an airdrop. As of December 24, 2020, you can claim your 1inch tokens by sending money through 1inch's own liquidity mechanism (then known as Mooniswap).

Providing liquidity to 1inch's liquidity platform is the primary way to earn 1INCH tokens. To do this, you must stake digital money that other users can use to make transactions. You can also make money with other cryptocurrencies this way.

1inch Aggregation Protocol

The use of several protocols, as well as argument validation and execution verification, makes it possible to accomplish atomic transactions at low cost while maintaining security and integrity.

1Inch Network

This network of decentralized protocols enables the most profitable, fastest, and secure activities in the DeFi market.

How do you Purchase 1INCH Tokens?

Many major cryptocurrency exchanges, as well as 1inch, offer the 1INCH coin. Only a handful of cryptocurrency exchanges (e.g. Binance and Huobi Global) do not currently offer 1INCH. For trading 1inch for Bitcoin, Binance is the most popular exchange; for trading Tether, it's 1inch.

You can also buy and sell 1INCH tokens on cryptocurrency exchanges. The coin is now worth $2.41 and has a market capitalization of $175 million as of January 27, 2021. From a supply of 1.5 billion, 72 million 1inch tokens are in circulation.

First, you must deposit the coin that 1INCH is linked to (in Binance's instance, USDT (Tether), BUSD, or Bitcoin) into your wallet before you can utilize the corresponding trading pair page to purchase 1INCH. On the one-inch mark, follow the instructions above.

Late 2020's development of 1inch's V2 platform allowed for more sophisticated trades to keep prices low, such as rerouting money that had been designated as collateral for loans on decentralized lending protocols Aave and Compound. In March 2021, the 1inch v3 aggregation protocol was launched, which, according to the company, lowered gas expenses by 30% compared to the 1inch v2 protocol.

Anyone can invest in the 1inch liquidity pools that underpin the 1inch Exchange and its Mooniswap AMM. And soon Mooniswap AMM will be replaced by the fully integrated 1inch Liquidity Protocol in December 2020 as part of the project's expansion. The 1inch Wallet app for iOS was released in April 2021 and merges the feature set of the online app into a mobile wallet.

In June 2021, 1inch introduced the 1inch Limit Order Protocol, which replaced the app's previous limit order feature based on 0x with an in-house solution that decreased gas fees and execution times, while eliminating protocol fees.

In the Future

1inch's future depends on the future of decentralized finance. Even though decentralized exchanges are becoming more popular, they are still prohibitively expensive, slow, and small compared to centralized exchanges like Binance. However, amid times of crypto price volatility, when centralized exchanges experience frequent outages, demand for decentralized exchanges (DEXs) grows—and aggregators like 1inch step in to fill the gap.