1inch Review 2023
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Despite being more vulnerable to cyber-attacks than decentralised exchanges (DEXs), centralised exchanges (CEXs) usually have far greater liquidity. To increase the popularity of DEXs, a lot of fintech developers have applied their talents and knowledge to resolve the liquidity issue.
The 1inch Network is one of these cutting-edge technology solutions. How does the platform solve the limited liquidity of decentralised exchanges, and how does it differ from traditional trading platforms? These are the main topics of our upcoming 1inch review.
About the DeFi 1inch Network
1Inch is a dApp and decentralised exchange aggregator developed to solve the liquidity problem of decentralised exchanges. The 1inch Network, which was founded in 2020 by Anton Bukov and Sergej Kunz, is the second crypto effort of these two Russian developers. Before launching the 1inch platform, Bukov and Kunz had a different website for yield farming dubbed Mooniswap. This project was primarily relying on Uniswap’s and SushiSwap’s liquidity, but it was abandoned when 1inch began to function in the crypto ecosphere.
For traders, 1inch offers a variety of innovative protocols, dApps, and a digital wallet to support traders’ strategies. Some of the most notable features we singled out are the liquidity, aggregation, and limit order protocols, the Pathfinder API, which enables liquidity pools, the liquidity mining programs; the 1inch Earn investment product, and more.
Apart from the aforementioned sophisticated trading instruments, you can also stake or swap tokens, exchange them for another cryptocurrency, or easily transfer them to another address.
Getting started at 1inch Exchange is pretty straightforward. You just need to connect your web3 wallet and start swapping ERC-20 tokens at the best possible exchange rates.
What Does the 1inch Network Represent?
In the DeFi (decentralised finance) domain, 1inch is a global network of decentralised protocols that work together to provide the speediest, most profitable, and safest trading processes in the world. The 1inch Network takes advantage of the powerful features of Ethereum, Binance Smart Chain (BSC), Arbitrum, Polygon, and Optimism, so its clients can exchange digital assets with ease at the best rates.
The following five different yet compatible components make up the 1inch Network:
- The 1inch Aggregation Protocol – This 1inch protocol is the core element of 1inch, as it uses a variety of sophisticated protocols and verifies the aggregated data collected from the numerous DEXs to provide low-cost and reliable atomic transactions.
- The 1inch Liquidity Protocol – This automated market maker (AMM) safeguards the traders from illegal brokering practices of trading on one’s own behalf. At the same time, this protocol maximises the return for the market makers.
- The 1inch DAO – The 1inch Network is run by a decentralised autonomous entity known as the 1inch DAO. The 1inch DAO allows 1INCH token stakeholders to decide on important protocol specifications and participate in network administration.
- The 1inch Foundation – The 1inch Foundation is a non-profit organisation committed to promoting the 1inch Network, the 1INCH token, and other community projects of the network. This foundation encourages donations via grants or other financial mechanisms as it works to increase stakeholder engagement in the DAO governance.
- The 1inch Labs – The decentralised 1inch Labs is one of the most important segments of the 1inch Network. It’s a group of software developers who work together with the 1inch DAO to create a broad scope of open-source protocols that are managed by the users.
How Does the 1inch Aggregator Operate?
Using specific DeFi protocols and automated market makers (AMM), the 1inch aggregation protocol searches for the best quotes across a wide range of high-liquidity DEXs in real-time to find the optimal pricing, hence fostering the use of atomic transfers that are both cost-efficient and safe. As a result, the 1inch platform optimises the deals over hundreds of decentralised exchanges on numerous networks, resulting in increased efficiency.
Put simply, the platform gathers liquidity from numerous exchanges and leverages smart contract technologies to facilitate the maximisation of its trading operations at the best prices possible.
With the help of the 1inch decentralised exchange platform, you can trade any ERC-20 token of the Ethereum blockchain – Avalanche, Polygon, Binance Smart Chain (BEP-20), Arbitrum, Optimism, or Gnosis/xDAI network token for the minimum cost.
If the token does not appear in the drop-down menu of the coin exchange box, it can be manually inserted by entering its contract address in the appropriate field. In this case, Coingecko is recommended for locating the contract in question.
Using MoonPay, a third-party payment processor provided by 1inch, you can acquire cryptos for the network’s gas fees. You can use your credit or debit card to buy ETH with MoonPay, but be aware that the processing costs might be rather hefty.
To purchase 1INCH tokens, you can pay only with Bitcoin (BTC) or Tether (USDT). Furthermore, you can trade 1INCH in futures contracts using the US dollar as the sole accepted fiat currency.
The 1INCH token can be obtained through most of the major cryptocurrency exchanges, such as Coinbase Pro, Binance, and Gate.io, to name a few.
The 1INCH Token
The non-profit 1inch Foundation issued the 1INCH Token as a native token of the 1inch Network, with a total supply of 1.5 billion tokens. The 1INCH token serves as both a utility token and an instant governance token within the network’s ecosystem. This token is primarily utilised as a bridge in the 1inch Liquidity Protocol to enable high-efficiency routing.
Additionally, the 1INCH token is used in the 1inch Aggregation Protocol’s and 1inch Liquidity Protocol’s governance modules. By holding or staking 1INCH tokens, you become eligible for the governance rewards, a portion of the swapping fee for the liquidity protocol, the slippage fee, etc.
1INCH Token Staking
While the most significant purpose of the 1INCH token is its governance feature, it also features an optional staking functionality that allows the 1INCH token holders to stake the 1INCH holdings and increase their 1INCH token balance.
If you want to stake your 1INCH tokens, you’ll need to navigate to the Governance tab through the DAO tab of the platform’s dashboard. When you complete this step, tap the dedicated button to connect your wallet that needs to hold some 1INCH balance. Next, enter the number of tokens you plan on staking and unlock them in a regular way or with the Infinite Unlock feature.
The Infinity Unlock Feature
With the Infinity Unlock feature, you won’t have to pay gas fees again if you chose to stake more 1INCH tokens. In a way, you’ll be able to exploit the same transaction infinitely.
Trading Fees and Limits
There is a lot of trading going on through the 1inch platform because it combines the DEX order books and reduces the rate of exchange. In turn, the deep liquidity of 1inch doesn’t require any transaction costs or withdrawal fees.
Moreover, 1inch doesn’t levy a deposit fee to its users, either. It’s also possible to cover your GAS expenses with the CHI token and cut down on network fees even further.
The 1Inch Exchange Fees
There are no fees associated with trading cryptocurrencies on the 1inch platform. The only expenses you’ll incur on 1inch are cryptocurrency exchange fees and the Ethereum network’s gas costs associated with your transactions. These exchange fees are determined by the decentralised exchanges that offer liquidity to the 1inch platform, as well as the costs of the respective currencies’ blockchains.
Is 1inch Safe to Use?
The 1inch exchange is a non-custodial dex aggregator whereby the cryptocurrencies you trade on the 1inch Network are held in a wallet rather than on the platform. Hence, if hackers target this platform, you can rest assured that your funds are safe.
Furthermore, the 1inch network’s financial processes are subject to frequent audits by renowned audit firms like Scott and Bigelow, Haechi Labs, Chainsulting, Consensys Due Diligence, SlowMist, Coinfabrik, etc. There have been no reports of any hacking attacks or security breaches of the 1inch platform since its launch in 2010.
If you require assistance with any of the platform’s functions, you can contact their customer service by email or live chat. You can also reach the 1inch support staff via one of their social media channels, such as Telegram, Discord, or Twitter.
What is a CHI Gas token?
The CHI token is a cryptocurrency built on the Ethereum blockchain network that is used on the 1inch exchange platform. This ERC20-standard token was made for the same reason as the GAS token, which is to make the Ethereum network more liquid.
More specifically, the CHI gas token represents a tokenised form of the actual gas price on Ethereum. If the gas price grows, so will the value of the CHI token and vice versa.
How can I connect my digital wallet to 1inch?
If you want to use your own wallet instead of the 1inch wallet supported only on iOS devices, follow these few easy steps to link your preferred wallet to the 1inch platform. Let’s take the MetaMask digital wallet as an example to guide you through this process.
In the top right corner of the 1inch.io app, click on the ‘Connect wallet’ button. Next, select your wallet (MetaMask, in our example) in the popup window, and press the ‘Connect’ icon. Once the wallet has been successfully linked, your Ethereum address will be shown at the top of the screen. You can access your transaction records, copy the wallet’s address, or deactivate it by clicking on it.
Which digital wallets are supported on the 1inch platform?
You can use some of the following digital wallets when trading through the 1inch DEX aggregator platform:
- 1inch Wallet (iOS),
- Binance Chain Wallet,
Pros & Cons
- A user-friendly interface;
- No trading fees;
- Deep DEX liquidity;
- Non-custodial platform;
- A developer’s hub for innovation of new protocols.
- MoonPay charges exorbitant fees for the payment processing;
- The 1inch exchange platform doesn’t support any fiat currencies;
- Beginners in crypto trading could find it a bit tricky.
The Bottom Line
The 1inch network is one of the industry’s most inventive solutions to DEX liquidity challenges. By combining liquidity aggregation and clever routing protocols, 1inch enables traders to execute a transaction based on the best market price without requiring detailed market analyses from the trader.
As one of the few crypto exchanges without any transaction fees, grasping the concept of trading behind the 1inch trading interface is worth the hassle.
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Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.