1inch Exchange Review – A Fierce Rival to Uniswap’s Hegemony

Exchange Reviews / 29.03.2021

Soon, it will be a year since decentralized finance rose to widespread popularity in the crypto industry and beyond. Many of the protocols emerging in 2020 are still on the rise, and the 1inch Exchange leads the pack. More so, it is challenging the superior positions of better established DeFi platforms.

1inch Exchange is an aggregator for decentralized exchanges. It launched in the summer of 2020 and has developed rapidly into one of the most promising DeFi protocols. Furthermore, it released its own governance token, and it is morphing into a decentralized autonomous organization (DAO) as we speak.

1inch Exchange is ambitious enough to refer to itself as the “Leading DEX Aggregator.” Even more, it wants to claim this position from the current holder, Uniswap. And at the moment, 1inch stands only third at the number of traders behind the famous DeFi platform.

In this review, we discuss 1inch Exchange, its rapid development, and subsequent success. Also, we show how this DEX aggregator works and how you can join in the fun. Read on to find out what 1inch Exchange is all about!

What is a 1inch Exchange?

1inch Exchange is a DeFi aggregator that brings together a substantial number of both decentralized and centralized exchanges to offer a wide array of services to its clients. For example, the platform provides DEX operations with smart routing, easy token swapping, and countless liquidity sources.

Instead of dealing with customers directly as a DEX, 1inch Exchange provides them with the best possible rates from other decentralized exchanges. As a result, 1inch becomes the go-to DeFi protocol for traders and liquidity providers who don’t want to waste time searching for the best prices one DEX at a time.

What are the 1inch Exchange Benefits?

One of the main benefits of using the 1inch Exchange is that users can pair up with optimal trading users on the platform while avoiding price slippage. Furthermore, they can engage in trades by using limit orders and placing funds in lending protocols. Lastly, they can transfer a variety of coins between numerous liquidity pools with potentially limitless options.

1inch Exchange also functions as a decentralized autonomous organization (DAO). In this regard, it also has a native token, 1INCH, which participants can use for various operations. For instance, they can stake their tokens to create limit orders or earn them by providing liquidity to the 1inch pools.

Additionally, 1INCH token holders benefit from instant governance from the 1inch platform. To clarify, they use their tokens to vote on various protocol settings and changes to the DAO.

Crypto traders love about 1inch Exchange because it does not charge trading, deposit, or withdrawal fees. The user-friendly interface makes it easy for beginner traders to stake, swap, or deposit their tokens.

Is 1inch Exchange Safe?

Up to this writing, 1inch Exchange has not been the victim of security breaches or hacking attacks. So, users can confide in its high-security protocols. Nevertheless, the exchange uses an “Infinity Unlock” feature that could become an easy target for cybercrimes in the future. (More on that later)

The feature that makes the 1inch Exchange safe is its non-custodial operational mode. In other words, the DEX does not hold the users’ coins or private keys. Meanwhile, centralized exchanges ask you to deposit your assets with them if you want to trade. So, they are less secure and more susceptible to hack attacks.

Are there any 1inch Exchange disadvantages?

Some might find the only downside when using this platform is that 1inch Exchange does not support fiat currencies.

A Brief History of 1inch Exchange

The story of the 1inch Exchange started in 2019. Back then, two promising crypto software developers, Sergej Kunz and Anton Bukov, met and exchanged ideas at the 2019 ETHNewYork Hackathon. After finding common ground for their DEX aggregator ideas, they founded 1inch. Next, they worked on its development for almost a year.

Kunz and Bukov have a rich history of participating in Hackathon events and winning important awards from Ethereum Global. However, before launching 1inch, Kunz was a senior developer for Commerce Connector, a company specializing in aggregating product prices. Also, he worked at Porsche, Mimacom, and Herzog.

On the other hand, Bukov has been a software developer for almost 20 years. In this time, he worked for several companies, and lately, for DeFi projects. For instance, he contributed to developing protocols like gDAI.io and Near Protocol, which have already established their names in the DeFi sector.

In August 2020, Kunz and Bukov launched 1inch Exchange after raising $2.8 million from prestigious companies in the industry. For example, some of the contributors include Binance Labs, Galaxy Digital, Greenfield One, Libertus Capital, and Dragonfly Capital. Other renowned financiers funding the project were FTX, IOSG, LAUNCHub Ventures, and Divergence Ventures.

In December 2020, 1inch managed to attract another $12 million in funding from other big names in the cryptocurrency industry. This time, the investors included Pantera Capital, ParaFi Capital, Blockchain Capital, Nima Capital, and Spartan Group.

In late 2020, 1inch launched its own automated market maker (AMM), called Mooniswap. This feature emerged from one of the developer duo team’s early projects, a yield farming portal.

The end of 2020 was a busy period for 1inch, as the platform launched the 1INCH token. As token holders receive governance voting power, the exchange began its journey to becoming a fully operational DAO.

So far, 2021 has been a fruitful year for 1inch Exchange. Firstly, they struck crucial partnerships with other protocols and crypto projects, such as REN, ARCx, Bitquery, Vesper, and ICHI. Secondly, it expanded to Binance Smart Chain to make 1inch Aggregation Protocol and 1inch Liquidity Protocol available to BSC users.

Lastly, at the end of March 2021, cryptocurrency exchange platform Gemini added 1INCH to its list. Consequently, the token became available to a larger pool of crypto traders.

1inch has had a rough journey in building a solid total value locked (TVL) amount. It started in late December 2020 at $55 million TVL. Then, it skyrocketed as high as $2,32 billion on Valentine’s Day, and everyone was in love with this DEX. Unfortunately, it has been on a slippery slope ever since. As of now, the TVL for 1inch stands at $224 million.

How Does 1inch Exchange Work?

Like other DEX aggregators, 1inch Exchange works as a tool for traders looking for the best possible rates. For example, the platform sources liquidity from numerous other decentralized exchanges. Then, it provides its users with better token swap rates than they might find on any of the DEXs at any given time.

Here are some of the 1inch Exchange features that make it stand out from other DEX aggregator platforms:

1inch Exchange Order Routing

1inch Exchange has its proprietary API, called Pathfinder, which it uses to track and identify the best routing options.

When a user looks for a possible swap opportunity, Pathfinder rapidly scans several exchanges to find the option with the best profit potential. Pathfinder can search deep within different markets to find the swap with the lowest gas fees.

1inch Exchange Fees

There are no fees for exchanges, deposits, and withdrawals on 1inch Exchange, as we mentioned before. Users only need to pay for the cost of sourcing liquidity from the decentralized exchanges that the platform scans in its aggregator algorithm.

1inch keeps all the necessary fees at a minimum through the introduction of two essential features:

  • Infinite Lock

This feature allows the platform to spend a particular token forever. As a result, users do not have to spend gas to unlock that asset ever again. Also, it is less costly than the Unlock feature available on the platform.

The Infinity Lock works as a form of savings on transaction fees. However, it may be the target of hack attacks in the future.

  • CHI Gas Tokens

CHI is an ERC-20 gas token on the 1inch Exchange. Participants to the platform can spend less on Ethereum gas fees, which can now reach as high as $20 per transaction.

With CHI, 1inch users can spend up to 42% less on Ethereum gas fees. Also, the gas tokens value is pegged to that of Ethereum’s gas price. Therefore, when the gas cost increases, so do that of CHI’s value and vice-versa.

1inch Liquidity Pools

Before 1inch rose to DeFi stardom, it used the Mooniswap portal to host its liquidity pools. However, Mooniswap was based on Uniswap, and 1inch could not challenge the most popular DEX aggregator with a look-a-like portal. It moved its pools to a news portal on the 1inch Exchange, called 1inch Liquidity Protocol.

At the time of this writing, the 1inch Liquidity Protocol included liquidity pools like 1INCH-ETH, 1INCH-USDC, and 1INCH-DAI.

What is 1INCH Token?

The 1INCH token is an ERC-20 token with multiple uses on the 1inch Exchange. Firstly, it is a utility token that users can stake to create limit orders. Secondly, they can earn 1INCH tokens by providing liquidity to the 1inch pools.

Lastly, 1INCH holders can use their tokens to vote on various changes to the 1inch protocol. Contrary to other DeFi protocols, on 1inch, participants do not need to have a minimum number of tokens to vote on proposals and changes.
1INCH token holders can vote on parameters such as the swap fees, the governance rewards, the price impact-free, and the exchange platform’s decay time. Additionally, they can vote on any proposal that comes from other participants.

Upon its release, the total supply of 1INCH tokens was set at 1.5billion units. No more than 30% of this amount went to the 1inch community. The members will receive these tokens gradually in the next four years.

The remaining 70% of tokens were split between the team members, who got 55.5%, and the platform’s future development, which received 14.5%.

At the time of this writing, 1INCH has a market cap of $622,687,284. There is a circulating supply of 149,406,476 1INCH, and one unit is selling for $4.16.

Where to Buy 1INCH Token?

You can buy 1INCH tokens at 1inch Exchange or numerous other crypto exchanges, such as Binance, Huobi Global, and Uniswap. However, you cannot use fiat currency to buy it. Instead, you can only use other cryptocurrencies to purchase 1INCH.

Where to Store 1INCH Token?

You can store 1INCH tokens in any ERC-20 compatible wallets. For example, you can use Nano Ledger S, Trust Wallet, or MetaMask.

How to Stake 1INCH Token?

Some 1INCH token holders may have an interest in influencing the governance on the 1inch DAO. However, most participants may want to stake their tokens and increase the value of their asset portfolio.

To stake 1INCH tokens on 1inch, you need to:

  • Buy 1INCH tokens and store them in an ERC-20 compatible wallet.
  • Head to the DAO tab on the 1inch website and straight to the Governance section.
  • Go to the token staking box and tap on the “Connect Wallet” button.
  • Connect your wallet and specify the amount of 1INCH tokens you want to stake.
  • Use either the Unlock or Infinite Unlock features to choose how you pay for gas.
  • Stake as many times as you want by making the last transaction.

After staking your 1inch tokens, you are eligible to receive rewards from the swap fee and the price impact fee.

The Bottom Line – 1inch Exchange Review

1inch manages to provide DeFi investors with greater liquidity by aggregating the resources available on multiple decentralized exchanges. This way, it solves one of the problems that has troubled the decentralized finance community for quite some time.

1inch Exchange also minimizes the risk of price slippage by splitting orders across numerous exchanges. As a result, traders do not waste time and money looking for the best possible swap rates.

It’s not easy to challenge Uniswap’s position, but 1inch seems to be one of the few DEX aggregators capable of shaking the hierarchy at the top. The platform provides plenty of user-friendly features and low fees. Now, all it needs to do is provide more innovative services and accept fiat currencies, and the road to success will shorten by half.

A creative writer in the field of content writing for the past 7 years. Iulian is passionate about his work and his interest in areas such as technology, travel, sports, literature and gastronomy have aided him to the research quality in articles that reflect these themes. Recently, he discovered the Bitcoin and the blockchain technology and he’s a big fan now.