The previous growth of the DeFi market in the year 2020 was alarming. Last year the global economy of the world experienced a severe contraction of 3%, which was a severe blow. However, the decentralized market experienced a 1757.14% increase within one year from 2019 to 2020.
This led to the numerous DEX (decentralized exchange) platforms that emerged just recently with innovative options.
One of the recent yet impressive DEXs is a 1inch exchange. 1inch is a decentralized exchange that allows users access to high liquidity pools and the ability to earn from them.
It is also known as the “Leading DEX Aggregator.” Meaning, it gathers liquidity and prices from other leading DEXs and makes the protocols within them available to users.
With a user-friendly interface, users can trade and swap coins on any desired pool that favors them the most. The platform itself doesn’t charge any gas fee for a crypto swap. It rather splits the trades between the exchange sources and provides users with their various prices to pick.
The platform eliminates the stress of users visiting various decentralized exchanges to know which is ideal for trade. What it does is to provide all the rates of the users’-desired cryptos with their respective price lists, thereby saving time!
In this 1inch review, we’ll explore all the important facets of the protocol to know how it works and if it’s worth the investor’s interest. So, if you want to learn more, keep reading this in-depth 1inch review.
What is 1inch?
1inch protocol is an ERC-20 token that runs on the Ethereum blockchain. It accumulates the price lists of the exchanges for the user to know which price is best. It has access to almost 50 exchanges, including SushiSwap, Uniswap, and Bancor.
The protocol was founded after the Eth Developers Conference in February 2019 by two Russians Co-founders, Sergeev Kunz, the CEO of 1inch, and Anton Bukov, the company’s CTO.
The seed round was held in August 2020 at Binance Laboratory with $2.8 million. In December that year, the investment funds amounted to around $12million and were led by Pantera Capital.
The goal of the platform is for users to have the choicest swapping between multiple exchange sources at their fingertips. There’s no necessity for creating an account and no Know-Your-Customer (KYC) policy. Users only have to connect their wallets to 1inch.exchange to partake in any transaction.
The Exchange platforms available presently for users to connect with through 1inch are—Bancor, Balancer, Oasis, KyberSwap Network, 0x Relayer, UniSwap, Mooniswap, SushiSwap, MultiSwap, MultiSplit, PMM, 0x PLP, UniSwap, UniSwap (V2), Air Swap, Compound, MiniSwap, LinkSwap, Curve, Aave, Aave Liquidator, Aave V2, Lua Swap, Indexed Finance, LiDo, Dodo, PMM2, MooniSwap Migrator, Power Index, PSM, Sythetix, Shell, Sake Swap, finance, yearn, Value Liquid, Swerve, WITH, Defi Swap, Cofix, 1inch LP v1.0, 1inch v1.1, LiDo, Chai, MStable, C.R.E.A.M Swap, and BlackholeSwap.
In 1inch, users can create their own order limits. It also allows them to earn from providing liquidity to liquidity pools, but this feature is not available in version 2. The native token for the protocol is the 1inch token, created for governance and primary transactions.
How Does 1inch Work?
We’ve noted before that 1inch allows the user to implement a transaction totally on one DEX or split it amongst numerous DEXs. A user can also edit the price slippage % and transaction charges depending on how fast he/she prioritizes the exchange.
The platform operates on sophisticated algorithms that search for the most cost-effective way to accomplish crypto swapping. Let’s say a user wants to exchange between Tether (USDT) for DAI, which means selling his/her USDT to obtain DAI.
This may actually require converting the USDT to different coins before converting into DA. This process might be encountered because of cost-effectiveness, but it’s secure and safe.
Merits and Challenges
The 1inch exchange has numerous advantages any investor should utilize wittily. There are also issues that you shouldn’t overlook if you’re planning on investing in this exchange.
The Merits of the 1inch Exchange protocol:
- User-friendly Interface: The user interface of the 1inch exchange is much easier to interact with and understand by users of all kinds.
- No Transaction Charges: When users deposit, swap, or even withdraw their funds from the pools, there are no additional charges from 1inch. Only charges of transactions between users and the external liquidity pools are placed.
- Minimal Swapping Fees: The platform allows users to decide between different exchanges which exchange has the most favorable prices and gas fees.
- The Liquidity Pool (LP) token allows access to Yield Farming: When users provide liquidity for pools, they are rewarded with some LP tokens depending on the amount they deposited. With these tokens, these users can reinvest back into the pools or utilize them for other activities.
- Minimal Possibility for security intrusion: The platform is decentralized and holds no external funds, neither from users nor liquidity pools.
- Availability of Most Favorable Rates: With the 1inch Pathfinder feature, a user can get the best rate for any exchange of their desired choice. And this saves time.
- Huge Liquidity: The exchange is connected to the liquidity pools of almost 50 exchanges—both centralized and decentralized pools.
We have seen a brief outline of the advantages of the 1inch decentralized exchange. Now, let’s find out what are the limitations of the protocol.
Limitations of 1inch exchange
- No Access to Fed Currencies: The platform has no availability for fiat currency exchanges, thus limiting its users’ access to only cryptocurrencies.
- Possibility of the “Infinity Unlock” to pose a threat in the future: The future is unpredictable, and we know it. Any crack in the wall and hacker will be able to break in and access users’ details. The feature’s storing information about transactions can be unsafe if there’s an attack on the network.
The 1inch Pathfinder
The pathfinder is a sophisticated API integrated within the 1inch exchange platform that embodies an algorithm for routing and price discovery. The API seeks the most favorable path to take to provide the cheapest token exchange.
This can include dividing the exchange amongst multiple exchange sources and even checking for their market depths. Eventually, a user can always get a better swap fee in a 1inch exchange than in other exchanges.
The Pathfinder was one of the core focuses after protocol’s V2 upgrade. Pathfinder uses the market depth of any coin to secure a connection between any exchange pair.
1inch Gas Charges
In 1inch, there are no additional charges for transactions from the platform. Users are, however, charged from the different pools they choose to transact with for a swap.
These charges are gotten made when a user is making a swap with a decentralized pool and needs to provide liquidity for the desired token swap. 1inch provides an approach to reduce these charges by its “CHI GAS tokens” and “Infinite Unlock” features. The transaction charges differ according to the external exchanges.
The 1inch protocol provides many utilities, which include being used as the governance token for transactions. Peculiarly, 1inch has no least requirement when it comes to holding the governance tokens.
Even though there are no transaction charges by the exchange, it utilizes smart ways to make in liquidity. One of which is its ability to profit from the slippage orders. Also, a part of the payment to the external exchanges goes to it.
This is referred to as an Ethereum token for the 1INCH exchange. It is a native token that powers 1NCH. The 1INCH token is higher than the normal ERC-20 ‘utility’ token governed by the DAO. It is a governance token that provides governance to the decentralized exchange aggregator and LPs (Liquidity Pools).
The 1INCH project team created the awareness for the token launch on the 25th of December, 2020. The second airdrop came up on the 12th of February, 2021. Both airdrops distributed tokens under similar conditions to enable users who missed the first opportunity to receive tokens.
February airdrop also distributed a total of 6,000,000 1INCH tokens to few Uniswap traders. The airdrop condition is that holders can decide on the parameters of the exchange using their voting power. These include the liquidity swap fee, governance reward, the decay or exchange theta time, and the ‘price impact’ fee.
These parameters are on the 1INCH website under the ‘DAO’ tab. Users can visit there to participate in the voting process on recent proposals. The 1INCH foundation allows token users to exchange tokens in the absence of an intermediary. The project functions as a price aggregator across DEXs in search of the best rate for its users.
1INCH’s total token supply is set at 1.5 billion. 30% of this is reserved for its community and will be distributed through airdrops. The 1INCH foundation planned to distribute the total supply within a 4years period.
The other 14.5% token supply will go to develop the community, while the remaining 55.5% distributed to team members and early investors.
1INCH airdrop exercise was a part of the token launch to create traffic around the 1INCH exchange. All the Ethereum wallets that related with 1INCH during the airdrop got the 1INCH tokens. This offer lasted till midnight (00.00 UTC) of 24th December 2020 and was for users who met any of the following conditions.
- Had a minimum of one trade before the 15th of September, 2020.
- Had a total of four trades.
- Have a total minimum trade amount of $20.
Ninety million tokens dropped on the 25th (Christmas day) after the exercise. The airdrop of 12th February 2021 recorded a total of 6million tokens given out to the Uniswap users. These Uniswap users are those who have not swapped tokens using the Mooniswap or 1INCH exchange.
The tokens were deployed to eligibility Uniswap users who;
- Have traded on Uniswap for at least 20days
- Have made a minimum of 3 trades in 2021
Moreso, there are liquidity mining programs that have been ongoing. They distribute more tokens for those who provide liquidity to particular pools.
And there is hope that these programs will continue. For people who wish to get more information on the recent liquidity programs and airdrops, visit the ‘1INCH exchange’ blog or other social sites.
The 1inch Wallet
1INCH does not require any account creation before one can trade on them because it is a liquidity provider and a DEX aggregator. All it requires is connecting a wallet supported by the platform to the 1INCH exchange and then fund with approved ERC-20 tokens.
The 1INCH wallet is referred to as a highly secured or protected solution for sending, receiving, swapping, and storing crypto assets. The 1INCH protocol supports the following wallets; MetaMask, 1inch Wallet (iOS), Ledger, WalletConnect, Torus, Portis, Bitski, MEW, Binance Chain Wallet, Fortmatic, Authereum, Arkane, and WalletLink.
The ‘1INCH Exchange’ supports the use of a good number of web-enabled hardware and mobile wallets according to the user’s preference.
How To Swap Assets With 1inch Using 1inch Exchange
To swap your assets on the 1INCH network, follow the steps below;
- Visit this webpage ‘on https://app.1inch.io/’ using your browser.
- On the exchange section, hit the ‘connect wallet’ icon on the top right side.
- Agree to the ‘terms and conditions that will pop up.
- Choose a network by selecting either ‘Binance Smart Chain’ or ‘Ethereum.’
- Then, choose between the wallets and connect. Once you link the wallet,
- Hit on the menu button from the drop-down click on the token to be swap. The Exchange displays a chart with various exchange rates from all the DEXs linked to it. This will help the user to make a good choice in selecting the token to swap.
- Then input in the ‘you pay’ space the token amount.
- In the column of ‘you receive,’ click to select the desired token to receive.
- Hit the ‘give permission’ button to approve the swap transaction.
Note: This is the first phase of the swapping process. It attracts a low gas fee. It approves for the transaction to take place and not the actual swapping.
- The next action is to click the ‘infinity unlock’ button to unlock the token permanently. You can choose to unlock temporarily just for this exchange. The former is cheaper while the latter attracts mores fees but is more secure.
- Go to ‘setting’ and enable ‘the partial fill’ or reset the ‘slippage tolerance’ gas fee.
- Confirm the Swap by clicking the ‘swap’ button. The exchange will present all the swap details inputted and ask you to confirm again.
- Confirm the swap in your wallet. Look out for a banner at the top right side indicating that the transaction is successful.
What Are the Minimum and Maximum Withdrawal Amounts?
Coinbase has adopted a safety measure to maintain an efficient and healthy network through the 1INCH platform and even on-chain. That is why there is a limit to both the least and highest amount users can send or transact through ‘the blockchain.’ This safeguard applies to all the blockchain tokens and not just to 1INCH.
However, 1Inch users can send a maximum of 31,250 to other networks (an external address) and withdraw a minimum of 3.33 1INCH from the exchange.
The 1INCH runs on the ‘Ethereum’ blockchain, and the token (1INCH) requires 35 network confirmations.
Is 1inch a Good Investment?
The 1INCH token seems to do very well currently in the crypto market. Most platforms consider it a worthwhile investment opportunity in the distant future. The recent growth of the Defi and Defi projects is a light to making 1INCH a good investment for its users.
The coin traded at $ 2.51 as of 25th January 2021 and is now trading at $ 3.45 (10th of June, 2021) with a 24h volume of $ 98.84 million. The 1INCH protocol can maximize trading and ensure low slippage. This feature, according to ‘Cointobuy,’ will enable it to attract more users to the crypto market.
1INCH may become one of the standard tokens in many years before tokens circulation stops. The dev team laid down a clear roadmap that can boost the project further.
The aim at introducing a protocol for ‘lending and yield farming’ plus the already existing ‘next-gen’ AMM protocol and the 1INCH native token. All these will increase the 1INCH token market value.
In addition, the second version (version 2.0) of the protocol has already gone live with new features, including the ‘Pathfinder API) to increase the token performance. Popular exchanges like BiONE, HBTC, Huobi Global, and OKEx listed 1INCH tokens as part of their exchanges for trading.
Conclusion of 1inch Review
1Inch enables users to utilize liquidity pools in other exchanges to maximize their returns on investments. If there’s one thing that drives investors is the opportunity to earn more from the funds they’ve invested into any project.
The 1INCH native token is just a few months old. This time frame is too short to gather enough evidence for a reliable long-term prediction.
Few predictions like the Wallet Investor only give the basic factors. It gave an estimated range of USB 20 to USD 25. However, there’s hope that its mode of operation and benefits will drive adoption, investment, and price increase.