In this article, we explore 1inch crypto, starting by answering the crucial question: What is 1inch in the crypto market? As a standout platform in the DeFi sector, 1inch offers a decentralized exchange aggregator that optimizes trades across various platforms for the best rates.
We will explore its innovative features, underlying technology, and its unique approach to DeFi.
What Is 1inch?
1inch is an aggregator that scans decentralized exchanges — liquidity providers. Its goal is to find the exchanges that provide the lowest crypto prices. This means that users only have to enter the cryptocurrency they want to find and 1inch aggregator will do the rest — it will find the best providers on the ETH, Binance Smart Chain, and Polygon networks.
The vision behind this project is to collect information from various blockchains to find the best deal for traders. To do that, the 1inch network uses the following:
- A decentralized application
- The 1inch governance and utility tokens
- Specialized 1inch wallet
1inch network is supported by a research lab and DAO. This network was created by Russian developers, Anton Bukov and Sergej Kunz in 2019. Today, many popular crypto exchanges use the 1inch aggregator, such as SushiSwap, Balancer, and Uniswap.
How Does 1inch Work?
The 1inch network splits search orders on decentralized exchanges to find those that offer the best prices for traders. To do this, the network uses smart contracts, arbitration bots, and aggregation and liquidity protocols.
1inch network enables traders to use one platform where they can compare multiple liquidity pools, to find the most suitable option. To offer the best rates it uses an algorithm called Pathfinder. This algorithm divides single trades into smaller parts to provide the most efficient options.
For example, if you want to trade $100 worth of DAI for ETH, the 1inch platform can offer you the option to convert DAI to another stablecoin. This way your fee will be much lower.
The 1inch network also uses the liquidity protocol, which allows its users to earn passive income. By locking their tokens into 1inch liquidity pools, users will be able to earn 1inch tokens.
Furthermore, this protocol uses a virtual rates feature whose goal is to solve the front-running issues. That said, virtual rates make liquidity pools unprofitable for malicious attacks.
And finally, the network uses the limit order protocol. This protocol allows users to place more refined orders, like trailing stop orders and stop-loss orders.
Although all trades take place on the platform, the 1inch network doesn’t keep the funds of its users. Moreover, 1inch is a DeFi platform, which means that it allows its users to vote on changes within the ecosystem.
What Is the 1inch Token?
The 1inch token is an ERC-20 token that serves as both a utility and governance token. This token will be used in tokenomics of all new protocols running on the 1inch network.
The total supply is capped at 1.5 billion tokens, while 1,129,420,827 tokens are currently in circulation. A total of 30% of the tokens will go to community incentives, while 14.5% will be used for future developments, grants, and dApps.
At the time of writing, the price of a 1inch token stands at $0.499, while its market capitalization is $563,536,454.
How Is the 1inch Token Used?
1inch token holders will be able to use it to conduct trades and pay gas fees, as well as vote on the changes within the 1inch ecosystem.
Other use cases include liquidity mining and staking. Liquidity mining allows token holders to earn rewards by contributing to the 1inch liquidity pool. On the other hand, staking 1inch tokens enables users to get rewards via 1inch’s farming program pools.
This token is currently available on two blockchains — ETH and BNB Chain.
Benefits of 1inch Crypto
The 1inch network offers many benefits to traders, such as:
1inch is a decentralized network, which means that its users will be able to conduct trades without the need for an intermediary. Moreover, the network is not controlled by a central authority.
The 1inch exchange enables traders to find DEXs that offer the best prices by splitting the search orders. This helps traders find the best trading rates and minimize slippage.
The 1inch network is trustless. This means that traders won’t have to share their funds with central bodies and that the platform won’t keep their funds.
The 1inch network is interoperable with multiple blockchains, from ETH to Binance Smart Chain, and polygon. As such, it will allow users to trade their tokens across different networks.
The platform’s native token, 1inch, serves as a utility and governance token. Therefore, it can be used for trading, staking, and voting.
So, what is 1inch in the crypto market?
The 1inch exchange protocol enables traders to use one platform to find the most acceptable trades from various DEXs. On that note, the 1inch network uses various protocols to find the lowest-costing trades, such as smart contracts, arbitration bots, and aggregation and liquidity protocols.
This is why many prominent crypto exchanges, like Balancer and Uniswap, use this protocol. The 1inch network is also trustless and interoperable with multiple blockchains. Moreover, its native token serves both as a utility and as a governance token. I.e., users can use it to conduct trades and to gain voting rights.