1Inch Exchange Project Insight: Offering Users a Single Point of Entry for DeFi

Slippage and high gas fees are two critical problems associated with sole decentralized exchanges. 1Inch Exchange solves these weaknesses by using multiple DEX liquidity to best route trades through a user-friendly UI.

By
Ahamdi Abarikwu
on
March 10, 2021
Category:
Project Insight

Introduction

Crypto exchanges facilitate all transactions in the cryptocurrency markets. Many of the original exchanges turned out to be centralized in nature. This somewhat clashes with blockchain’s core ideals to enable users to securely and privately trade without needing intermediaries. Yet, centralized exchanges often kept users’ details (breaching privacy) and retained a user’s crypto assets. Ultimately, centralized exchanges morphed into a powerful central entity that blockchain/crypto wanted to do away with right from the beginning.

As decentralized finance (DeFi) became ever so popular, particularly in 2019, true decentralized exchanges (DEX) were developed. These applications have been essential,  serving the DeFi community and providing decentralized services. Some DEX’s exist as sole exchanges, while a new trend is aggregated DEXes, where a DEX platform integrates liquidity across DEXes into its native platform. One of the leading DEX aggregators is the 1Inch Exchange which runs on both the Binance Smart Chain (BSC) and Ethereum network.

What is 1Inch Exchange?

1Inch is a DEX aggregator that integrates many other popular DEXes into itself. It was founded in 2019 by two astute Russian developers, Sergej Kunz and Anton Bukov. 1Inch aims to provide the lowest swap rates for DeFi users by channeling their transactions through the most efficient paths using multiple DEX providers as liquidity. At the time of writing, 1Inch has more than 44 liquidity sources and DEXes integrated. With this much liquidity, it is almost a guarantee that users have the best rates at all times.

While it was initially set up to be a DEX aggregator for Ethereum-based assets, a recent surge in Dapps development on the Binance Smart Chain has prompted 1Inch to expand its operations to the Binance Smart Chain. DEXes on BSC have now become integrated into 1Inch’s platform. With this, all features of 1Inch are now available to BSC users. Users can switch between Ethereum and BSC networks to take advantage of both blockchains.

Standout Features of 1Inch

  1. No transaction fees

1Inch has a mission of giving users the best swap rates possible. It, therefore, does not charge any transaction fees. Users only get to pay the gas fee applicable to the DEX through which their order is filled. There are also no deposit nor withdrawal fees.

  1. Fully decentralized

1Inch does not requie users to provide any personally identifiable information.

  1. User-side security.

1Inch is a non-custodial DEX. A user’s assets are not domiciled on the platform, rather all assets are held in a user’s wallet, and the user has full control over them.

  1. Failed transactions and slippage are virtually non-existent

Users who transact on non-aggregator DEXes often experience failed transactions or high slippage costs because of low liquidity for some trade-pairs. Such is not the case with 1Inch. The aggregation of other DEXes on 1Inch ensures that users have access to high liquidity in a single transaction, even for large volume transactions.

  1. The platform has an excellent interface that is easy even for a newbie to use.
  2. Low Risk Smart Contracts

1Inch is practically safe from hacks because it does not keep any reserves on it. It merely acts as a router.

  1. Chi Gas Token.

The platform is continually evolving, constantly improving with novel features to keep the user experience. Despite assuring users of the best possible rates, 1Inch created a gas token. The Chi Gas token helps reduce the cost of gas that a user pays when interacting with the other DEXes through 1Inch. When activated by a user, the Chi Gas token can reduce gas fees by up to 40%. More about how to make use of the Chi gas token can be found here.

Recent Milestones

  1. 1Inch Version 2

As part of its continuous improvement program, in November 2020, the platform got an upgrade to Version 2. This brought additional features not existing on any other DEX at the time. A new intelligent routing algorithm, polished user interface, shortened response time, improved order fill mechanism with extra options, tweaks for maximum returns and lowest gas etc were all innovations bundled into Version 2. More details about the upgrade are highlighted here.

  1. Bitquery Partnership.

1Inch is always on the lookout for partnerships that will add value to users’ experience. A strategic partnership with the blockchain data provider, Bitquery.io, has just been announced in March 2021. This collaboration will see 1Inch adding more cutting-edge trading tools to its DEX. Specifically, a real-time trading data feed from multiple DEXes and protocols. Traders can view the trading data to enhance their overall trading activities.

How to Use 1Inch DEX.

1Inch does not require users to create an account; all needed to use the platform is to connect an address through any supported wallet. To secure a wallet, go to the website and, from the interface, select the wallet you’re to use and click on the ‘connect’ button.

After a successful connection, there are two drop-down buttons that you will use to select the tokens you have and the one you want to swap to. There are also settings that a user can adjust to customize the parameters of the particular trade. All the settings are laid out on an easily navigable interface. Once satisfied with the chosen parameters, click on ‘swap’, approve the transaction in your wallet, and the trade will be executed at the best rate in no time. Here is a basic guide for beginners.


1Inch Tokenomics

The platform token of the 1Inch Exchange is the 1INCH token. It is a utility token and will also function as a governance token. To acquire voting privileges, holders of 1Inch token must stake it to receive a proportional number of votes, while the platform’s liquidity providers take part in governance with their LP tokens.

The total supply of the 1Inch token is 1.5 billion, of which 30% is for incentivizing the platform’s community and 14.5% as a development fund, both of which will be gradually unlocked over 4 years as can be seen in the distribution model.


Final Words

Slippage and high gas fees are two critical problems associated with sole decentralized exchanges. 1Inch Exchange solves these weaknesses by using multiple DEX’s liquidity to best route trades using a user-friendly UI. With its aggregated protocol, innovative features, and recent expansion into the Binance Smart Chain network, 1Inch offers arguably the best user experience. 1Inch outclasses existing decentralized exchanges and aggregators. Having a team that is focused on continuous improvement, we can look forward to more exciting updates in the time to come.

More information can be found on 1Inch Media pages:

Website

Github

YouTube

Twitter

Medium



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Ahamdi Abarikwu

Ahamdi Abarikwu is an Electrical Engineer and a lover of anything crypto. He is also an avid writer, proofreader and editor. He loves to play Scrabble in his spare time.