What is 1inch (1INCH)?

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The world of decentralized finance (DeFi) continues to evolve at a rapid pace, offering innovative tools that simplify and optimize cryptocurrency trading. One such standout platform is 1inch, a decentralized exchange (DEX) aggregator designed to help traders access the best possible prices across multiple liquidity sources. At the heart of this ecosystem lies the 1INCH token, which empowers users with governance rights and utility functions within the network.

Whether you're a seasoned DeFi participant or new to the space, understanding how 1inch works—and how it can enhance your trading efficiency—is essential. This guide breaks down the core components of the 1inch network, its underlying protocols, and the role of the 1INCH token in shaping the future of decentralized trading.

Understanding the 1inch Network

The 1inch network is a decentralized exchange aggregator that scans multiple DEXs in real time to find optimal trading routes for users. By pulling liquidity from platforms like Uniswap, SushiSwap, Kyber Network, and 0x, 1inch minimizes slippage and reduces transaction costs—two major pain points in DeFi trading.

Decentralized exchanges operate using smart contracts and non-custodial frameworks, ensuring users retain control over their funds. However, individual DEXs often suffer from fragmented liquidity, leading to price discrepancies and inefficient trades. 1inch solves this by combining liquidity pools across networks, effectively creating a unified marketplace for better execution.

👉 Discover how decentralized trading can be smarter and more efficient with advanced aggregation tools.

This means instead of manually checking prices on various platforms, traders can rely on 1inch to automatically route their swaps through the most cost-effective paths—factoring in both token prices and gas fees.

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The Founders Behind 1inch

Launched in May 2019 during the ETHGlobal New York hackathon, 1inch was created by Surjey Kunz and Anton Bukov. Both developers brought extensive technical expertise to the project.

Surjey Kunz had previously worked as a senior developer at Commerce Connector and contributed to projects at Herzog Agency and Mimacom consultancy. His background in DevOps and cybersecurity—including experience at Porsche—laid a strong foundation for building secure blockchain solutions.

Anton Bukov, with nearly two decades in software development and five years focused on DeFi, co-developed projects like gDAI.io and contributed to the NEAR Protocol. Together, their vision was to create a tool that maximizes trading efficiency in an increasingly complex DeFi landscape.

Over the years, 1inch has attracted significant investment, including $2.8 million from Binance Labs in August 2020, followed by $12 million from ParaFi Capital and Pantera Capital later that year. In 2021, the platform secured $175 million in funding led by Amber Group—highlighting strong institutional confidence in its long-term potential.

How Does the 1inch Protocol Work?

At its core, 1inch leverages three key protocols to deliver superior trading performance: the aggregation protocol, the liquidity protocol, and the limit order protocol.

The Aggregation Protocol: Smarter Swaps, Lower Fees

Similar to how travel booking engines compare flight prices across airlines, 1inch’s aggregation protocol scans dozens of DEXs to identify the most favorable swap routes. Its proprietary Pathfinder algorithm evaluates not just token prices but also gas costs and slippage tolerance.

For example, if you want to swap ETH for DAI, 1inch might split your trade across Uniswap and SushiSwap—or even route through a stablecoin intermediary—to achieve the best net outcome. All of this happens seamlessly behind the scenes, with one-click execution.

This intelligent routing ensures traders avoid poor fills and excessive fees—common issues when using standalone DEXs.

The Liquidity Protocol: Earn While You Provide

Beyond trading, 1inch enables users to become liquidity providers (LPs) through its next-generation automated market maker (AMM) system. Users deposit assets into liquidity pools and receive LP tokens in return, which represent their share of the pool.

These LP tokens can be staked or used elsewhere in DeFi ecosystems. Importantly, 1inch’s design helps protect LPs from front-running attacks, a persistent issue in traditional AMMs where bots exploit pending transactions for profit.

Since 1inch operates as a non-custodial platform, users never pay deposit or withdrawal fees. Your assets remain in your wallet at all times—only interacting with smart contracts during transactions.

👉 Learn how you can start earning yield through secure liquidity provision today.

The Limit Order Protocol: Precision Trading in DeFi

One of 1inch’s most innovative features is its limit order protocol, which brings advanced order types to decentralized exchanges—a capability previously limited to centralized platforms.

Traders can set conditional swaps that execute only when specific price targets are met. For instance, you could place a limit order to sell ETH at $3,500 even if the current price is lower. When market conditions align, the trade executes automatically.

Additional features include:

This level of flexibility makes 1inch a powerful tool for both speculative traders and those looking to manage risk more effectively.

What Is the 1INCH Token?

The 1INCH token is an ERC-20 utility and governance token central to the 1inch ecosystem. It gives holders several key privileges:

Distribution of the 1INCH token was designed to promote decentralization, with significant allocations going to early users, team members, investors, and community incentives.

By holding and using 1INCH, participants actively contribute to the platform’s long-term growth and decision-making processes.

Frequently Asked Questions (FAQ)

Q: Is 1inch safe to use?
A: Yes. As a non-custodial platform, 1inch does not hold user funds. All transactions occur directly between wallets via smart contracts, reducing counterparty risk. Always verify URLs and approve transactions carefully.

Q: Can I use 1inch without holding 1INCH tokens?
A: Absolutely. You can trade, provide liquidity, or use limit orders without owning the native token. However, holding 1INCH unlocks governance rights and staking benefits.

Q: Does 1inch support blockchains other than Ethereum?
A: Yes. While built initially on Ethereum, 1inch now supports multiple chains including BNB Chain, Polygon, Optimism, Arbitrum, and others—expanding accessibility and lowering gas costs.

Q: How does 1inch reduce slippage?
A: By splitting large trades across multiple DEXs and optimizing routing paths using real-time data, 1inch minimizes price impact and improves fill rates.

Q: What are LP tokens?
A: Liquidity Provider (LP) tokens represent your share of a liquidity pool. They can be redeemed for your deposited assets plus earned fees or used in other DeFi applications.

Q: Is there a mobile app for 1inch?
A: While there’s no official standalone mobile app, 1inch offers a mobile-optimized website and integrates with popular wallet apps like MetaMask for seamless trading on the go.

👉 Access powerful DeFi tools with just a few clicks—start exploring decentralized trading now.

Final Thoughts

In a DeFi environment where speed, cost-efficiency, and security are paramount, 1inch stands out as a critical infrastructure tool. By aggregating liquidity, minimizing slippage, and offering advanced trading options like limit orders, it empowers users to trade smarter—not harder.

Whether you're looking to optimize your swaps, earn yield as a liquidity provider, or influence the future direction of the protocol through governance, the 1INCH token and its underlying technology provide meaningful utility across the ecosystem.

As decentralized finance continues to mature, platforms like 1inch will play an increasingly vital role in connecting users with optimal financial opportunities—without sacrificing control or transparency.