1inch Exchange Review 2023
Making Crypto Simple
As a result of their increased susceptibility to cyber-threats, centralized exchanges (CEXs) are often more regulated and legally protected than their decentralized counterparts (DEXs).
CEXs boast of higher liquidity and trading volume made through their regulated platforms. The liquidity problem of the DEXs has been addressed by a large number of fintech entrepreneurs to boost their popularity among cryptocurrency traders.
1inch is one of the decentralized cryptocurrency exchanges that appears to have considerable popularity among its customers as a liquidity generator, boasting more than 1 million participants on the Ethereum blockchain network.
But before we go into the characteristics of the 1inch exchange and how it solves the liquidity problem, let’s take a look at what the 1inch network represents.
The 1inch Network Explained
Regarding the world’s fastest, most efficient and safest trading processes, 1inch’s worldwide network of DeFi-based decentralized protocols is unrivalled. Namely, the 1inch Network brings together decentralized protocols that, when used together, make DeFi services much more profitable, speedier, and safer.
With the joint forces of the Ethereum blockchain network, Polygon, Binance Smart Chain (BSC), Arbitrum, and Optimism, 1inch Network clients can effortlessly swap digital assets with simplicity and at the fastest speeds and cheapest rates.
The 1inch Network is managed by a decentralized autonomous organization called the 1inch DAO, which empowers 1INCH token holders who choose to stake their tokens to participate in network management and vote on essential protocol specifications for the platform’s future growth.
About the 1inch Exchange
The 1inch exchange is a real technological breakthrough in the DeFi business, as it operates as both a DEX liquidity protocol and a decentralized exchange aggregator.
Before developing their crypto startup, the founders of this cryptocurrency exchange, Anton Bukov and Sergej Kunz, established a yield farming platform known as Mooniswap. When Bukov and Kunz released the 1inch platform in 2020, Mooniswap’s operations ended and brought the 1inch exchange to life.
This cutting-edge automated market maker (AMM) and decentralized exchange (DEX) aggregator’s primary purpose is to allow traders to locate the best cryptocurrency quotes across a broad group of decentralized crypto exchanges and get the most out of their trading strategies.
The aggregation protocol is an essential component of the 1inch platform. This highly innovative fintech solution utilizes a wide range of different protocols and validates the gathered information received from a multitude of DEXs to deliver atomic transactions that are both affordable and dependable.
How Does the 1inch Aggregation Protocol Work?
By minimizing slippage on atomic payments, the 1inch aggregation protocol shields the DEX ecosphere from the market volatility and improves the liquidity of the decentralized exchanges.
It is possible to mitigate the volatility of cryptocurrencies by sharing a particular transaction among various DEXs to obtain the best exchange rates.
Moreover, the 1inch v4 smart contract is an integral and most important component of the 1inch DEX aggregator. The v4 smart contract validates the transactions as they occur, thus providing security for the user capital even when crypto investors employ an unreliable liquidity source.
The 1inch Protocol Token (1INCH)
The 1INCH token serves two purposes on the 1inch network: a utility token and an instantaneous governance token. For the most part, the token is used in the governance units of the 1inch Aggregation Protocol and the 1inch Liquidity Protocol to facilitate high-efficiency routing and obtain the best rates.
The 1inch exchange supports the trade of 400 different cryptocurrency projects through its network. These projects include tokens that adhere to the Ethereum network’s ERC-20 standard, tokens built on the Polygon Network, Binance Smart Chain tokens and stablecoins, Arbitrum Network tokens, Optimism Network tokens, etc.
You can obtain cryptocurrencies for the network’s gas expenses by utilizing MoonPay, a third-party payment processor offered by 1inch. MoonPay also accepts credit and debit cards. However, processing fees are somewhat high.
On the other hand, if you choose to invest in some 1inch tokens, make sure you have some Bitcoin (BTC) or Tether (USDT) at hand, as these two coins are the only accepted cryptos for purchasing the platform’s native token.
1inch Exchange Fees
The 1inch exchange is a platform that does not charge any fees. Specifically, the withdrawal fees and other expenses associated with trading digital currencies on this marketplace are not levied by this particular exchange.
The only charge that must be paid for investing in the crypto market via this platform is the network fee, i.e. the mining fee imposed by the blockchain network of the particular coin included in the transaction.
The 1inch provides traders with many technologically-advanced protocols, decentralized applications (dApps), and a crypto wallet to complement their trading techniques. Some of the most prominent financial instruments on the 1inch exchange are:
- The aggregation, liquidity, and limit order protocols;
- The Pathfinder API that powers the liquidity pools on the 1inch network;
- Liquidity mining tools;
- Generating passive income through staking your tokens;
- Swapping your coins for other cryptos, etc.
One of the most notable benefits of utilizing the 1inch exchange is the potential for a significant decrease in gas costs required to carry out the transactions. Employing the exchange’s one-of-a-kind gas token or the Infinity Lock feature are two ways to decrease the gas fee cost.
The Infinity Unlock Feature
It is possible to avoid paying gas fees by using the 1inch exchange’s Infinity Unlock functionality, which enables you to use a given token perpetually without paying further fees to unlock it again for future transactions.
Is 1inch Safe to Use?
When it comes to the safety of its customers’ assets and financial dealings, 1inch places a high priority on taking the necessary precautions.
When you use the 1inch exchange, your digital assets are not stored on the platform but in a digital wallet as a safer option. As a result, even if cybercriminals attack this platform, you do not need to worry about the security of your assets.
In addition, some of the most prominent internal auditors in the industry (such as Consensys Due Diligence, and CoinFabrik) regularly evaluate 1inch smart contracts for adherence to the legal provisions.
Customers of 1inch exchange have 24/7 access to support representatives whenever they need advise or solutions to some issue regarding the trading operations on this platform. You can reach them by using the live chat feature on their site or emailing them your case.
Pros and Cons
In sum, here is our overall assessment of the platform, taking into account both its positive and negative aspects:
- 1inch is a highly innovative, user-friendly, and fee-free platform;
- Provides deep DEX liquidity;
- Doesn’t hold ownership over your assets;
- The platform is regularly audited for enhanced safety.
- Using the MoonPay payment provider can be pretty expensive;
- The concept of this platform could be a bit confusing for beginners.
The Bottom Line
The 1inch network is one of the most creative solutions the fintech sector has come up with to address DEXs’ liquidity issues.
There aren’t many DEXs that aggregate DEX liquidity providers’ order books to provide the best possible rates for their clients. Uniswap and SushiSwap are only a few that can compare with a 1inch DEX aggregator.
Also, not many exchanges are fee-free and offer so many benefits and deep liquidity like 1inch. Consequently, while this platform is somewhat more challenging to use than others, it’s well worth the investment in time and effort.
Frequently Asked Questions
Apart from the Infinity Unlock feature previously explained, the platform has one more mechanism to help you save on the Ethereum network transaction costs. Namely, you can also cut down on your gas fees with the CHI gas token.
The CHI gas token is an ERC-20 token designed for crypto traders to save on gas expenses. Users may trade on the 1inch platform for up to 42% less than average transaction fees, thanks to this token’s peg to Ethereum’s gas price.
Aside from its governance function, the 1INCH token features a different staking mechanism that allows holders to stake their 1INCH tokens and improve their 1INCH account balance.
If you want to stake your 1INCH tokens, navigate the Governance tab on the DAO dashboard. After completing this action, click the button to link your wallet, which must contain some 1INCH tokens.
Choose how many tokens you want to stake on the platform and if you want to unlock them using the Infinite Unlock feature. After completing these steps, you can only watch your 1INCH balance grow.