1inch is a DEX aggregator that finds the best possible paths for a token swap, helping users get better exchange rates compared to if they used a single exchange. A central problem with cryptocurrencies is there are many different DEXes, with subtly different prices, liquidy, fees or slippage. For smaller-size traders, the cost is small, but for those dealing with large sums of money, finding the best rate can save lots of money.
1inch consists of 2 protocols: the Aggregation Protocol and Liquidity Protocol. 1inch uses its advanced ‘Pathfinder’ algorithm to search exchanges and liquidity protocols to facilitate and optimise the trade route. It is capable of splitting a single trade transaction across multiple DEXes. Since launching in May 2019, 1inch has facilitated ~28B of total volume.
1inch’s liquidity protocol launched in Aug. 2020 under the name ‘Mooniswap’. When the protocol upgraded to V2, ‘Mooniswap’ rebranded to 1inch Liquidity Protocol (Liquidity Protocol). The key feature of V2 was the price impact fee, “a fee that grows with price slippage to ensure that liquidity providers and 1INCH token stakers earn significantly more on volatility.” In total, 1inch Limited (the Team) has raised $14.8M from leading crypto funds such as Pantera Capital, ParaFi Capital, Binance Labs and Galaxy Digital.
1INCH Token Utility
1inch’s native ERC-20 token is 1INCH, which has a hard-capped maximum supply of 1,500,000,000 1INCH.
1INCH must be held to participate in the so-called ‘instant governance’ of 1inch. Instant governance is a “new kind of governance where the community can participate, benefit and vote for specific protocol settings without any barrier to entry.”
1inch also offers a gas-saving ERC-20 token called the ‘chi gastoken’ (CHI). Launched in Jun. 2020, CHI is pegged to Ethereum’s gas price.
The distribution of 1INCH is as follows: core backers and contributors (~53.3%), community incentives (30.0%), protocol growth and development (~14.4%), and advisors (2.3%).
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