On Christmas 2020, the world of DeFi witnessed something amazing. A leading DEX aggregator, 1Inch exchange decided to launch their native 1Inch token. To commemorate this launch, they decided to reward the regular users of their platform with some tokens. The airdrop created a lot of excitement among traders. So much so that the token was immediately listed on Binance and traded for as high as $2. A spectacular launch, we can say. But, what exactly is 1Inch, and how do you use it?
What is 1Inch Exchange?
Founded by Anton Bukov and Sergej Kunz in 2019, 1Inch is a decentralized exchange (DEX) aggregator. Now, DEX is a platform that facilitates peer-to-peer cryptocurrency transactions online. It is much like FOREX for the crypto world. This means that you can swap one crypto token for the other in a hassle-free way and because it is decentralized, DEX does not require third-party governance.
There are quite a few DEXes out there, with UniSwap, Kyber Network, and Oasis being the most popular ones. But, each of these platforms sells cryptocurrencies for a different price. Not to forget, the platform fees for each of these exchanges also vary quite a bit. If only you could find the cheapest possible way to make a trade, how much better would that be? This is where 1Inch comes into the picture.
How Does it Work?
1Inch uses an advanced algorithm that searches over 33 different liquidity protocols to come up with the most efficient swap route for your trade. Efficient in terms of price, gas fees, liquidity, and slippage. For instance, if you want to trade Tether (USDT) for Wrapped Bitcoin (WBTC), the platform’s algorithm scrapes the cryptocurrency prices on a bunch of different exchanges to ensure that your trade takes place through an efficient route. Sometimes the algorithm finds a direct route, and sometimes it splits the transaction between multiple DEXes to save the maximum amount of money.
1Inch AMM Protocol
In addition to the above, 1Inch, in August 2020, launched its own Automated Market Maker (AMM) protocol called Mooniswap. This protocol is a direct competitor to Uniswap and has a new approach to exchange rates to reduce impermanent loss. It aims to be more beneficial to liquidity providers by decreasing the profits of arbitrageurs. After the launch of the platform’s native token, Mooniswap was renamed as 1inch Liquidity Protocol.
How to Use 1Inch
1Inch exchange is pretty simple to use. Here is a quick guide. You will need a non-custodial crypto wallet like MetaMask or TrustWallet to trade on 1Inch.
Step1: Open the 1Inch exchange page on your web browser.
Step 2: Click on the “Connect Wallet” button on the top of the page. Then accept the terms and conditions and choose your wallet. Open your wallet and confirm the connection.
Step3: Now, if you want to swap Tether for DAI, select USDT in the “pay” box and DAI in the “receive” box. Keep in mind that you will also need some USDT to pay the gas fee.
Step 4: Next, you need to give the platform permission to spend the tokens on your behalf. You have two options for this, unlock or infinity unlocks. Infinity unlocks can save you some gas fees.
Step 5: To execute the trade, click on the Swap Now button, and just like that your trade is done.
As mentioned before, 1Inch launched its native token called the 1Inch token on Christmas 2020. It is a governance token, meaning holders can use it to vote on crucial decisions that run the platform. It has a total supply of about 1.5B, which will be distributed over a period of 4 years. As of March 2021, the token has a value of $5.10.
After its first successful airdrop in December, the exchange decided to host another airdrop of 15 million coins in Feb 2021. This time it has expanded the recipient pool and regular Uniswap users can also claim the drop.
Where can you buy 1Inch?
Ever since its launch in 2019, 1Inch has seen exponential growth even in the face of strong competition. Given that the DeFi wave does not die down, the future for 1Inch is bright and it has the ability to become the next big thing in the crypto world.