Hey guys :) I’m back with another comprehensive Q&A piece, this time for the decentralized exchange (DEX) aggregator platform and its native governance token – 1inch (1INCH).
1inch Exchange aggregates all major DEXes into one platform by rolling their liquidity and pricing into the 1inch Exchange, making it easy for users to get the best price for their desired trade.
Now, before we dive in, the following piece is similar to my latest articles on BadgerDAO (BADGER), Harvest Finance (FARM), and The Graph (GRT), so if you haven’t already seen those, be sure to check them out as well.
Hope you enjoy!
The list of Q&A is kind of long so first comes the list of questions that I have prepared the answers to:
- What is 1INCH Exchange?
- Who and When Created 1INCH Exchange?
- What is 1INCH Token Used For?
- What are the fees on 1INCH Exchange?
- What is Chi-Gastoken
- How is 1INCH Governed?
- How is 1INCH Different From Uniswap?
- Where to Store 1INCH?
- Where to Buy & Sell 1INCH?
1. What is 1INCH Exchange?
1inch Exchange website homepage
1inch Exchange is the leading decentralized exchange aggregator platform in the Ethereum DeFi ecosystem. It aggregates all of the liquidity and pricing data from all major DEXes so that users can get the best prices and lowest slippage for their trades.
You can use 1inch Exchange to facilitate a token swap between ETH and any ERC-20 token. The swap can be split across exchanges to accommodate large trades, minimize slippage, and provide the best pricing possible.
In doing this, 1inch Exchange is able to provide an optimal trading environment for advanced traders who otherwise might find other AMMs to be incompetent for their needs.
Many DEXes suffer from low liquidity in general and this low liquidity is further fragmented as more DEXes come online. This makes large volume trades susceptible to high slippage to the point where trading on a DEX may not be worth it.
However, 1inch Exchange fixes this by splitting orders across exchanges, all while keeping the trade within one transaction, providing a seamless user experience.
That said, 1inch Exchange is an alternative to trading on centralized exchanges as it’s non-custodial. All trades are performed within a single transaction directly from a user’s Ethereum-based wallet. Your funds are never held by a centralized third party and you remain in full control of your crypto at all times.
2. Who and When Created 1INCH Exchange?
1inch Exchange founders Sergej Kunz and Anton Bukov respectively
In an interview with The Defiant, Sergej explained that he and Anton were experimenting with arbitrage bots 1-2 weeks prior to the hackathon and thought to themselves, “why can't we just put this technology in front of everyone”.
So, they got to work on the idea of 1inch and pitched it to industry leaders like Vitalik Buterin and Liam Horne from EthGlobal. There was a lot of interest in the idea but no one had created it yet and Liam wasn’t even sure it was possible.
But Sergej and Anton knew it was, so they began building, and at the hackathon, it became a fully working MVP using three DEXes; Kyber Network, Bancor, and Uniswap.
That weekend, 1inch Exchange was born and has since grown to become the leading DEX aggregator platform for the Ethereum DeFi ecosystem.
1inch Exchange Founders
Sergej Kunz serves as the CEO and Co-Founder of 1inch and CEO of Bulktrade GmbH. He previously worked as a Senior Developer at Commerce Connector and as a Software Engineer at MimaCom AG and Porsche AG.
Anton Bukov serves as the CTO and Co-Founder of 1inch and is a Senior Smart Contract Engineer at NEAR Protocol. He previously worked as the Chief Blockchain Technologist Engineer for MultiToken, was a Blockchain Developer for BitClave, and a Senior iOS Developer at Machine Learning Works. Bukov has more than 15 years of experience as a Software Engineer.
3. What is 1INCH Token Used For?
1inch Exchange $1INCH token logo
The native cryptocurrency of 1inch Exchange is $1INCH – an ERC-20 token serving as the protocol’s governance and utility token.
The $1INCH token is used for:
- Governing all 1inch Network protocols
- Liquidity Mining & Community Incentives
Governing 1inch Network Protocols
The $1INCH token launched with “instant governance”, a new feature that allows the community to vote for specific protocol settings under the 1inch DAO model. With instant governance, every user’s vote matters and the $1INCH token is used as voting power when they stake to vote.
Liquidity Mining & Community Incentives
$1INCH tokens are distributed to users who provide liquidity for these 6 pools:
As time goes on, the liquidity mining pools may change and there will be other $1INCH distribution events where community members are incentivized with $1INCH tokens to contribute to the protocol in some way.
$1INCH Token Launch and Distribution
$1INCH token 4 year unlock schedule (Source)
The total supply of $1INCH is 1.5B and the circulating supply is 72,164,169 as of January 14, 2020.
The $1INCH token launched through an airdrop to wallets that have interacted with 1inch until December 24, 2020. To be eligible for the airdrop, your wallet had to have made at least one trade before September 15, 2020, or at least 4 trades in total or trades for a total of at least $20.
$1INCH Token Distribution
- 6% was distributed in the initial airdrop
- 0.5% was distributed in the first two weeks of liquidity mining
- 30% will be allocated to community incentives and will be unlocked and distributed over the next 4 years.
- 14.5% is allocated to the protocol’s growth and development fund with a 4 year unlock and distribution period.
- The remaining % of the token supply will be distributed to liquidity providers and backers of the protocol over a 4 year period.
4. What are the fees on 1INCH Exchange?
1Inch Exchange does not charge any additional fees on top of the fees charged by the DEXes who facilitate the swap. In doing this, 1inch can provide its users with the best available swap rates. Also, 1Inch does not charge any deposit or withdrawal fees because all trades are facilitated directly to and from the user’s wallet.
The only fees incurred by users is the network fee (which is charged by the exchange the user is routing through, ie. Uniswap, Kyber Network, etc.) The network fee charged is dependent on what the gas price is at the time your transaction is executed. During times of high network activity (Ethereum network congestion) these network/gas fees will be high.
5. What is Chi-Gastoken
The Chi-Gastoken (Chi) is a token developed by 1Inch that enables 1inch Exchange and Curve users to save significantly on gas. It takes advantage of the Ethereum storage refund by having its smart contract erase the storage that was filled during minting.
The Chi-Gastoken is based on the original Gastoken GST2 implementation with a few additional changes:
- Its sub smart contract size is reduced by 1 byte by mining a private key with a Profanity address generator.
- Deployed sub smart contracts for their efficient address discovery during the burning process.
- Fixed ERC-20 incompatibilities of GST2
With these changes, the Chi token is 1% more optimized for minting, and 10% more efficient for burning.
How to get it, How to use it:
The Chi-Gastoken is used as a hedge against gas fee volatility because it can be bought and stored when gas is cheap and released (spent/burnt) when gas is expensive.
How to get Chi:
- Go to 1inch and select the ETH(WETH)/CHI token pair and the amount in the dropdown window
- Deactivate all the DEXes apart from CHI Minter (100%)
- Confirm the transaction from your Web3 Wallet
- Do the swap
How to use Chi:
- Activate the CHI Gastoken button on the 1inch interface
- The estimated cost of your transaction will be up to 50% less, than your wallet displays
You can also trade Chi on 1inch Exchange if you’re not going to use it. To do this, simply mint or buy Chi when the gas price on Ethereum is low and sell Chi when Ethereum gas prices go up.
6. How is 1INCH Governed?
The $1INCH token is used to govern all 1inch Network protocols through different governance modules. The $1INCH token is used as voting power, giving $1INCH token holders governance rights.
See below, the different governance modules and the parameters in which $1INCH token holders can vote on.
1inch Aggregation Protocol Governance Module
This governance module enables $1INCH token holders to vote on Spread Surplus settings (positive slippages), and whether or not to reward stakers with a Governance Reward.
The Spread Surplus is initially set to 0% for governance stakers, all of it goes to referrers. But this can be changed via 1inch governance to reward governance participants as well as referrers.
1inch Liquidity Protocol Governance Module
This governance module enables pools to directly govern their own parameters such as: the price impact fee, the swap fee, the governance reward, the referral reward, and the decay period.
Just like the aggregation governance module, all voting is done with the $1INCH token. But with this module, there are two types of governance: pool governance and factory governance, each is responsible for different parameters.
7. How is 1INCH Different From Uniswap?
First and foremost, 1inch is not a decentralized exchange (DEX) like Uniswap, but rather a DEX aggregator.
1inch is a DEX aggregator that pulls liquidity from across pretty much all major DEXs (via their API). In fact, 1inch sources liquidity from DEXes and DeFi protocols like Uniswap, Kyber Network, 0x Protocol, Balancer, Compound, and many more.
1inch liquidity sources (Source)
Another key difference is that 1inch accommodates more advanced traders. It allows users to set limit orders, features an interactive price chart, and has an active order and order history tab:
1inch Exchange Interface
On the other hand, Uniswap only supports quick and easy token swaps via instant market orders. It’s very simple and accommodating for quick token swaps, not for market analysis, risk management, and order tracking like 1inch.
One more big difference between the two token swap platforms is the fees. 1inch Exchange can offer its users lower fees than on Uniswap because it splits orders across other DeFi protocols to get the best possible rates.
Also, 1inch features its own Chi-Gastoken which even further saves its users on fees.
8. Where to Store 1INCH?
MetaMask wallet website homepage
1inch (1INCH) is an ERC-20 token residing on top of the public Ethereum blockchain. That said, you can store 1INCH in any ERC-20 token supported wallet.
However, the best wallets for storing 1INCH are non-custodial Web3 wallets that provide seamless access to the best DeFi applications, like 1inch Exchange, Harvest Finance, Uniswap, etc.
That said, DeFi wallets are the best for storing 1INCH because the token is widely used and supported in the Ethereum-DeFi ecosystem.
Popular 1inch (1INCH) Wallets:
- Trust Wallet (mobile)
- Argent (mobile)
- Coinbase Wallet (mobile)
- MyEtherWallet (MEW) (web)
- Metamask (web)
In addition to the above-listed wallets, 1inch (1INCH) can be stored on a wide variety of other reputable wallets supporting ERC-20 tokens.
9. Where to Buy & Sell 1INCH?
1inch (1INCH) can be bought and sold on a peer-to-peer (P2P) basis but the most popular way to buy, sell, or trade $1INCH is through centralized and decentralized cryptocurrency exchanges.
You can buy and sell 1INCH with cryptocurrency or fiat currency at the following top DEXes and exchanges. In most cases, you will be able to buy 1INCH with BTC, ETH, or stablecoins.
- 1inch Exchange - ETH, WETH, USDT, USDC, DAI, SUSD, SNX, YFI, FARM, etc.
- Uniswap - WETH, USDC, DAI
- Binance - BTC, USDT
- Okex - ETH, USDT
- 0x Protocol - WETH, REN, USDT, ETH, USDC, AKRO, ROOK
In addition to the exchanges listed above, 1inch (1INCH) is also traded on a variety of other exchanges and platforms that enable people to buy, sell, or trade cryptocurrencies.
Hope you enjoyed that read :) Let me know if I have missed something in the comments.