In general, Uniswap and 1inch are comparable. The main distinction between them is that 1inch allows you to trade on a variety of exchanges, whilst Uniswap only sources trades from its own liquidity pools.
1inch is the way to go if you require a slippage-reducing exchange that sources cryptocurrency in real-time from the greatest liquidity pools.
On the other hand, inexperienced investors who are purchasing and retaining cryptocurrencies will probably favour Uniswap’s plain simplicity. In addition, Uniswap’s liquidity of almost $6 is more than sufficient to fund the majority of trades.
What Is 1inch (1INCH)?
Decentralized exchange options will be more than ever in 2021.
What should I choose between the DEXes Uniswap, Sushi, Curve, Loopring, Kyber, 0x, Balancer, Bancor, and lesser-known DEXes like DODO?
A DEX aggregator called 1inch (1INCH) determines the cheapest path for your trade by comparing prices across exchanges. In order to get the best value for your money, 1inch allows you to use all of the exchanges available to you rather than just one.
The DeFi platform is thoroughly explained, along with its main features, in this 1inch reference. We also analyse the 1INCH token and its obscure relative, the Chi Gastoken.
What is 1inch?
The revolutionary new decentralised trade platform 1inch combines two functions into one:
Platform for decentralised exchange
Aggregator of decentralised exchanges
You may wonder what the difference is. The exchange’s DEX platform, which uses a structure akin to Uniswap, makes it simple to purchase and sell cryptocurrencies.
The feature that differentiates 1inch from its competitors is the DEX aggregator. By combining the liquidity from well-known DEXes like Uniswap, Sushi, Balancer, Bancor, and others, 1inch operates.
In this situation, aggregating implies that 1inch looks for the best rates on the trade pairs you’re interested in across all exchanges.
When it’s time to execute the trade, 1inch divides your order into multiple trades and distributes them across different exchanges. On the user end, the trade appears to you as a single transaction.
How 1inch DEX Works
Everyone who uses a DEX in 2021 has encountered the same difficulty: petrol costs. Gas prices for DEX trade have skyrocketed as a result of increased Ethereum network congestion.
In order to find the best cryptocurrency pricing, you must take gas fees into account while making DEX trades. The token you’re looking for may be available on some exchanges, but the transaction may end up costing more if gas is taken into account.
By effectively distributing your trade among exchanges utilising micro-transactions, 1inch was developed to address this problem. Spreading transactions among exchanges aids 1inch in putting together the highest return for your deal while also reducing total gas expenses.
Visit the app, then fill the swap interface with the tokens you want to trade to try 1inch out for yourself. By entering a trade from ETH to CRV, we tested the user interface. As you can see, when compared to other exchanges, 1inch offers the highest CRV for the trade.
The main goal of 1inch is not just to lower gas prices. The exchange also lessens slippage by spreading your transaction across several DEXes.
You must grasp how pooled liquidity functions in order to comprehend slippage. A significant swap or high-volume trading cannot be efficiently absorbed by an illiquid liquidity pool for ETH-CRV. The price of the token slips increases as a result, giving you a lower CRV than was originally offered.
The chance that numerous exchanges lack the liquidity to handle a sizable buy or high volume for a specific pair of assets exacerbates the issue.
But keep in mind that 1inch combines liquidity from many DEXes. One of 1inch’s brilliant ideas is to source tokens from different pools to reduce slippage.
Large traders, or “whales,” adore 1inch for its skills at eliminating slippage. Even if you aren’t by definition a whale, 1inch can help you cut your trading expenses, especially if you’re purchasing a token with heavy token traffic.
1inch Key Features
A decentralised exchange that 1inch invented effectively addresses liquidity issues The squad has accomplished more than that, though. See 1inch’s salient characteristics below.
Liquidity Protocol
1inch initially concentrated on collecting liquidity from other DEXes. The team quickly moved forward with developing a liquidity protocol to draw native liquidity to 1inch itself.
Anybody can invest in the liquidity pools that make up 1inch and its Mooniswap AMM (more on that below).
Despite introducing a liquidity mining programme along with its liquidity protocol, 1inch has had trouble luring LPs from well-known AMMs like Uniswap and Sushi. Currently, the entire value trapped in 1inch liquidity pools is just about $45 million, a tiny fraction of the billions on Uniswap.
Aggregation Protocol
1inch released its v3 aggregation protocol with updated smart contracts in March 2021. The update improved on a good thing by enabling the exchange to process aggregated trades more quickly and effectively.
The 1inch v3 version connects to more DEXes than ever before thanks to Ethereum and the Binance Smart Chain, in addition to the increased unicorn power. You may obtain liquidity on the biggest DEXs for Ethereum and BSC with just one click.
Limit Order Protocol
DEXes like Uniswap sadly lack sophisticated trading tools. Thanks to the team’s creative limit order protocol, this is not the case with 1inch.
By utilising the dynamic pricing mechanism of the protocol, 1inch offers DEX traders complex order types as stop-loss orders, trailing-stop orders, and auctions. The 1inch limit order protocol doesn’t collect fees in addition to the conditional order features, which is a significant distinction from rival 0x.
Multi-Chain Integration
Ethereum-based decentralised exchanges and programmes take great pride in their own blockchain. This kind of maximalism has forced multiple DEXs into Ethereum’s expensive environment as competing blockchains advance in scale.
This may help to explain why 1inch’s announcement of a Binance Smart Chain integration surprised the cryptocurrency community. 1inch made the right decision to try to recreate the BSC DeFi ecosystem’s success on another chain after seeing its astounding rise throughout the first half of 2021.
The same features accessible in 1inch’s Ethereum version are also available in its BSC deployment. 1inch on BSC routes to PancakeSwap, Venus Protocol, and BakerySwap instead of Uniswap and Sushi.
Shortly after 1inch launched on BSC, the scalable Ethereum transaction blockchain Polygon launched. At the moment, 1inch on Polygon can only aggregate data from Uniswap, Sushi, Aave, and Curve.
Low Trading Fees
No matter the size of your trade, 1inch doesn’t impose trading fees. To us, that is a major plus. Please note that this does not imply that there are no trading fees of any kind. Your trade will be subject to additional exchange costs if 1inch routes it through them, and 1inch will pass those fees along to you.
That’s not to argue that 1inch deals wind up costing more than going to Uniswap or Curve directly. Your expenses frequently end up being just as low, if not lower, with a favourable exchange rate on top of that.
Mooniswap
The 1inch team first tried to set its aggregator product apart from the liquidity protocol that was being developed concurrently. The Mooniswap DEX was created as a consequence to simplify token swaps while also giving liquidity providers additional leverage.
Notably, Mooniswap returns LPs rather than arbitrageurs a part of slippage gains. Protections for traders against threats like front-running and referral payments for LPs are two more additions.
Explaining the 1INCH Token
The 1inch is represented by the ERC-20 token 1INCH on the Ethereum network. A BEP-20 1INCH coin became accessible via the Binance bridge following 1inch’s deployment on BSC.
The 1INCH token has experienced significant growth as an asset this year. It was added to Coinbase in April, and Grayscale, a powerful investment firm, is thinking about include 1INCH in its holdings as well.
Check out the 1INCH token’s current numbers before reading about its usage.
1INCH Token Details
- Market cap = $543,122,311
- Max supply = 1,500,000,000 1INCH
- Circulating supply = 172,724,370 1INCH
- Total value locked = $49,845,479
- Distribution type = Airdrop + liquidity mining
Governance
A governance token called 1INCH allows its owner to take part in 1inch DAO voting procedures. Simply keep 1INCH tokens in your Metamask wallet to cast your vote.
Liquidity Routing and Mining
In addition to its governance applications, 1INCH serves as a base pair and incentive in a liquidity pool to encourage the onboarding of new liquidity. Yield farmers can access the APY offered in liquidity pools by purchasing and holding 1INCH tokens, such as 1INCH-YFI and 1INCH-DAI.
What about the Chi Gastoken?
The 1inch team also published another token that not many people are aware of. It is known as the Chi Gastoken or just CHI.
We discussed 1inch’s capacity to dramatically lower gas expenses during trading earlier in this book. The answer to your question is no, 1inch does not have a particular deal with Ethereum miners.
1inch substitutes the Chi Gastoken. In a word, the Gastoken enables you to retain CHI as a hedge against Ethereum gas prices. You can use CHI tokens to pay for a significant percentage of your trading gas expenses when it’s time to trade on 1inch.
High-volume traders and arbitrageurs who use liquidity pools gain most from CHI. However, even if you don’t trade frequently, Chi Gastoken can still save you up to 50% on gas.
