At the foundation of the crypto industry are two main types of exchanges - centralized and decentralized. Centralized exchanges are the familiar Coinbase, Binance, and Kraken.
Exchanges belonging to the latter category, such as Pancakeswap, SushiSwap, and Uniswap, are where those who want total autonomy go.
However, decentralized exchanges (DEXs) have always faced one pressing problem, the long battle with low liquidity and high slippage.
That brings us to the 1inch decentralized exchange platform.
Want to skip the reading and just buy 1inch? You can purchase is on Coinbase.
1inch Aggregation Protocol
1inch was created in the 2019 EthNew York Hackathon.
The founders, Anton Bukov and Serjez Kunz, had long been fascinated by the arbitrage opportunities of the crypto market.
That attraction, helped by their background in smart contract auditing, spurred the ambition to create a system where users could access the best market prices through arbitrage bots dispersed across various DEXs.
The result was the creation of the 1inch decentralized exchange aggregation protocol.
At its launch, the 1inch protocol could link with the following three DEX platforms: Bancor, Kyber, and UniSwap.
After that, the team launched an improved version along with the 1inch token and a DAO.
Today, 1inch is connected to over 40 liquidity platforms, including networks like Ox and Balancer.
What Makes The 1inch Aggregator Protocol Unique?
When trade orders are placed on a decentralized exchange for a trading pair with low liquidity, the outcome is usually a sharp increase in the slippage.
This forces traders to pay higher amounts for the assets they set out to buy.
An innovative way to get around this problem is to spread such an order across multiple DEXs where the assets are listed so that you can handpick the best market price possible.
Without an automated solution, the manual implementation of that strategy will be slow and inefficient.
However, with the 1inch exchange aggregation mechanism, traders can execute all of those steps at a thunderbolt speed in one transaction at a single click.
Thus, 1inch saves investors/traders from the stress of looking for the lowest market prices and fees. You place a trade while it scouts the various DEX platforms to find the cheapest offer.
1inch also launched a DeFi platform, Mooniswap, one of the most sophisticated and easy-to-use Automated Market Maker.
What Is The 1inch Token?
1inch is the native token of the 1inch network. The launch of the token culminated with the unveiling of the DAO governance system.
Unlike other ERC-20 DEX tokens, the token is not limited to a single blockchain network but is supported by the Binance Smart chain through a cross-chain bridge.
1 INCH is also the governance token of the 1inch ecosystem. Therefore it confers voting rights on its holders.
That means 1inch coin investors can make decisions to alter parameters like the swap fee and the yield interest rates for stakers.
How To Invest In 1inch
To invest in this cryptocurrency, you have a couple of options:
On each of these centralized exchanges, you will be required to sign up with an email or mobile number and verify your identity.
After that, the steps to buying/selling the 1inch token are just as simple as depositing your funds and clicking the buy button for the token pair available under the market section.
Another way is to stake the coin. As a governance token, 1inch has what is referred to as "instant governance." The token can be used for voting rights on how the platform should be run.
At the time of this writing, stakers can earn anything between 5-90% APY (Annual Percentage Yield) from locking up any amount of 1inch tokens in the liquidity pool.
1inch can also be turned back into the DeFi protocol, Mooniswap, to generate profit.
Is Investing In 1inch Worth It?
At the time of its release, 1inch was able to outperform both BTC and ETH. However, it is now down to the world's 114th cryptocurrency.
The aggressive move from $1 to above $7 was impressive until it whittled down to $2.75 and has now spent the last few months dwindling around the $4 mark.
Though presently not the most hyped crypto-token, the 1inch holds a significant place in the development of the blockchain space, especially because it is the key lever that controls one of DeFi's most innovative projects.
While other DEX platforms compete fiercely among themselves, the 1inch network is in a special stratosphere of its own.
It is presently the only exchange platform that can give users an iron-clad guarantee of fair play against front running, a situation where high-ticket investors make profits at the detriment of small pocket investors.
Citing the token's resilience against recent market fluctuations and the stellar performance of the network as a fundamental factor, experts believe that 1inch might be worth more than its current value in the foreseeable future.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.