Decentralized exchanges (DEXs) have transformed how users trade cryptocurrencies—offering peer-to-peer trading without intermediaries. But with so many DEXs available, prices for the same token can vary significantly across platforms. Enter 1inch Exchange, a powerful tool designed to solve this fragmentation by finding the best possible trading rates across multiple decentralized platforms.
This guide dives deep into what 1inch is, how it works, and why it matters in today’s decentralized finance (DeFi) ecosystem.
Understanding 1inch: The DEX Aggregator
At its core, 1inch is a decentralized exchange (DEX) aggregator. Instead of limiting trades to a single platform, 1inch scans dozens of liquidity sources across various blockchains to find the most favorable price for your trade. It then splits large orders across multiple exchanges—often combining several swaps behind the scenes—to minimize slippage and reduce costs.
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The platform launched in 2019 during the ETHNewYork hackathon by developers Sergej Kunz and Anton Bukov. Since then, it has evolved from a simple aggregation tool into a full-fledged DeFi ecosystem offering liquidity protocols, limit orders, and even a mobile wallet.
As of mid-2021, 1inch provided access to:
- Over 50 liquidity sources on Ethereum
- Around 20 on Binance Smart Chain
- Approximately 8 on Polygon
By pulling data from major DEXs like Uniswap, SushiSwap, Balancer, and its own liquidity protocol, 1inch ensures users don’t overpay due to fragmented market liquidity.
How Does 1inch Work?
Imagine you want to swap Ethereum (ETH) for Wrapped Bitcoin (WBTC). On one DEX, the rate might be slightly worse due to low liquidity. On another, high fees could eat into your profits. Manually checking each platform is time-consuming and inefficient.
1inch solves this with an intelligent routing algorithm that evaluates all available paths in real time. Sometimes, the optimal route involves swapping ETH into an intermediate token before converting it to WBTC—across multiple platforms—resulting in a better final price than any single exchange could offer.
This process, known as path optimization, also helps reduce slippage (the difference between expected and executed price), especially for larger trades.
Additionally, 1inch v3 reduced gas fees by up to 30% compared to earlier versions by optimizing contract execution and minimizing redundant blockchain calls. This makes trading more cost-effective, particularly on the Ethereum network where gas prices are notoriously volatile.
What Is the 1INCH Token?
Launched on December 25, 2020, the 1INCH token serves as the governance and utility token for the 1inch Network. With it, holders can participate in platform decisions through decentralized voting—a model the team calls “instant governance.”
Key Features of the 1INCH Token:
- Governance: Vote on proposals related to protocol upgrades, fee structures, and treasury allocations.
- Staking Rewards: Users who provide liquidity to the 1inch Liquidity Protocol can earn rewards in 1INCH tokens.
- Airdrops: Early adopters were rewarded via token airdrops based on usage prior to December 24, 2020.
As of early 2021:
- Circulating supply: 72 million
- Total supply: 1.5 billion
- Market cap: ~$175 million
- Price: ~$2.41
While market values fluctuate, the token remains central to incentivizing participation and aligning user interests with long-term network growth.
How to Use 1inch Exchange
Using 1inch is straightforward and requires only a compatible crypto wallet.
Step-by-Step Guide:
- Visit 1inch.exchange in your browser.
- Connect a wallet such as MetaMask, WalletConnect, Ledger, or MyEtherWallet.
- Select the token you want to trade (e.g., ETH) and the token you wish to receive (e.g., WBTC).
- Enter the amount and review the estimated output.
- Confirm the transaction in your wallet.
⚠️ Note: You’ll need some ETH to cover Ethereum network gas fees when trading on the mainnet.
Once confirmed, 1inch automatically routes your trade across multiple DEXs to secure the best rate. The entire process usually takes just seconds.
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Where Can You Buy 1INCH Tokens?
The 1INCH token is widely available across top cryptocurrency exchanges including:
- Binance
- KuCoin
- Huobi Global
- FTX
- OKX
Binance leads in trading volume for 1INCH/USDT and 1INCH/BTC pairs, while the 1inch Exchange itself dominates Tether (USDT) trading activity for the token.
To buy 1INCH:
- Deposit a paired cryptocurrency (like USDT or BTC) into your exchange account.
- Navigate to the 1INCH trading pair.
- Place a market or limit order.
Alternatively, you can swap directly on the 1inch app using any supported ERC-20 token.
Recent Developments and Expansion
Since its inception, 1inch has rapidly expanded beyond basic aggregation:
- v2 Launch (Late 2020): Improved speed and efficiency with advanced swap routing.
- v3 Aggregation Protocol (March 2021): Cut gas costs by up to 30% and enhanced cross-protocol integration.
- Binance Smart Chain & Polygon Support (Feb & May 2021): Broadened accessibility beyond Ethereum.
- 1inch Liquidity Protocol (Dec 2020): Replaced Mooniswap, enabling deeper liquidity and better yields.
- 1inch Wallet App (April 2021): Launched for iOS, combining secure storage with seamless swapping.
- Limit Order Protocol (June 2021): Introduced gas-efficient, protocol-free limit orders using an in-house solution.
These innovations reflect 1inch’s commitment to improving user experience and scalability across multiple chains.
Frequently Asked Questions (FAQ)
Q: Is 1inch a decentralized exchange?
A: Not exactly. It’s a DEX aggregator—it doesn’t host its own order books but pulls liquidity from other decentralized exchanges.
Q: Do I need to create an account to use 1inch?
A: No. Like most DeFi platforms, 1inch operates non-custodially—you connect a wallet and trade directly from it.
Q: Are there fees for using 1inch?
A: There’s no platform fee for swaps. However, users pay standard network gas fees and potential protocol fees from underlying DEXs (though these are minimized in v3).
Q: Can I earn passive income with 1inch?
A: Yes. By providing liquidity through the 1inch Liquidity Protocol, you can earn staking rewards in 1INCH tokens.
Q: Is 1inch safe to use?
A: The platform has undergone third-party audits and uses smart contracts with proven security practices. As always, ensure you're on the official site and approve transactions carefully.
Q: Does 1inch support NFTs or lending?
A: Currently, 1inch focuses on swapping and liquidity provision. It does not offer native NFT trading or lending services.
The Future of 1inch
The future of 1inch is closely tied to the broader adoption of DeFi. While centralized exchanges still dominate trading volume, their susceptibility to outages during high volatility has driven interest in decentralized alternatives.
Aggregators like 1inch play a critical role by making DEX trading faster, cheaper, and more efficient. With ongoing development funded by its ecosystem treasury—and strong community governance—the platform is well-positioned to grow alongside the expanding multi-chain landscape.
As long as fragmentation exists across DEXs, tools that optimize liquidity and pricing will remain essential. And for now, 1inch stands at the forefront of that evolution.