Cryptocurrency exchanges are essential to the entire industry. They facilitate trades and swaps between cryptos, acting as the foundation for the ecosystem. There are 2 main types of these exchanges: decentralized and centralized. Centralized exchanges like Coinbase, Gemini and Binance are controlled by a trusted 3rd party. They are often faster, offer more liquidity in each trading pair and have more features.
Ethereum, the 2nd-largest cryptocurrency by market capitalization, allows for decentralized finance (DeFi) platforms using coded agreements called smart contracts. An entire ecosystem of these financial platforms have sprung up on Ethereum and similar blockchains like Binance Smart Chain (BSC).
Decentralized exchanges (DEXes) like 1inch, Uniswap and PancakeSwap make up many of the most popular DeFi platforms on Ethereum and BSC. DEXes allow users to keep complete control over their cryptos and most offer trading with many more tokens than their centralized counterparts. Unfortunately, DEXes often suffer from low liquidity, a problem solved by the innovative 1inch aggregation protocol.
What is 1inch?
1inch is an ERC-20 token on Ethereum and is also available on BSC through a cross-chain bridge. It acts as both a utility and governance token for the 1inch Network. 1inch holders can stake 1inch through the platform’s Decentralized Autonomous Organization (DAO) to earn staking rewards and help tweak the protocol. Users help decide vital parameters like the swap fee for the liquidity protocol and how much interest governance stakers earn. They can also stake 1inch in the network’s liquidity pools to earn anywhere between 5% to 90% APY, depending on the other token in the pool.
1inch Network makes use of 3 different protocols to make sure users get the best prices possible. The first and likely most important is the aggregation protocol, which aims to solve the largest problem facing DEXes today — low liquidity. 1inch’s Pathfinder technology can route your swaps through multiple exchanges to find you the best prices. In essence, liquidity is a measure of how easy it is to swap one asset for another without affecting the price significantly. Modern DEXes use Automated Market Makers to reduce the impact of low liquidity and incentivize users to supply their tokens in liquidity pools. This is often not enough to completely solve the problem. 1inch fixes the issue further because it can split your swap across different exchanges to minimize this price impact.
The 2nd protocol in 1inch Network is a DEX, which helps improve prices further. Users supply 1inch token, Ethereum and more to earn significant interest and provide liquidity for swaps. There is a long list of pools with 1inch and other tokens to improve the range of the aggregator protocols.
1inch token often acts as a connector between tokens that are usually difficult to swap between directly. For example, if you wanted to swap some Ether for a less popular token, the aggregator protocol may swap your Ether to 1inch and then swap the 1inch for the other token.
The 3rd protocol used by 1inch is a complex limit order system useful for anyone dissatisfied with regular market orders and looking to swap tokens at specific prices.
Brief History of 1inch
1inch Network was born in 2019 at EthNewYork’s Hackathon, an event where software developers come together to hack together new projects. 1inch’s founders, Serjez Kunz and Anton Bukov, were interested in arbitrage opportunities in the cryptocurrency market. Arbitrage is an investment strategy where someone takes advantage of (usually small) price differences between exchanges.
An example of arbitrage would be if the investor sees Ethereum is trading on Uniswap for $3,100 and $3,120 on Sushiswap, they will buy a large amount of Ethereum on Uniswap and sell it as fast as possible on Sushiswap. Generally, profit margins of arbitrage trades are small, but the accompanying risk is low.
At the Hackathon, Kunz and Bukov built a protocol to aggregate prices from a bunch of different DEXes and called it the 1inch Aggregation Protocol. At first, the protocol only tracked 3 exchanges: Uniswap, Bancor and Kyber. At the time of writing, 1inch aggregates prices from more than 100 liquidity sources over 3 different blockchains, Ethereum, BSC and Polygon.
In August 2020, 1inch launched Mooniswap, the 1st version of what would eventually become the 1inch liquidity protocol. In the span of a few months, the 1inch team managed to launch 1inch V2, 1inch token and their own DAO. 1inch V2 introduced the Pathfinder routing system, a new user interface and support for many more liquidity sources.
1inch token has seen wild price swings over its relatively short lifetime. In its first week, it dipped to below $0.85 before skyrocketing to $6 about 2 months later. It reached its all-time highs of above $7.70 on May 8, 2021, about the same time Ethereum topped out. Since the token’s peak, it has been a bumpy road of dramatic price changes, falling to $2.12 only 2 weeks later. At the time of writing, 1inch is hovering around $1.50, down significantly from its all-time high.
How to Buy 1inch
Looking for a quick and painless guide to purchasing 1inch token? Look no further than these easy 3 steps.
- Open an online account.
1inch is a fairly popular token available on many large trading platforms. The best crypto exchanges with 1inch trading include Gemini, Coinbase and Crypto.com. You will need to sign up for an account on one of these exchanges (or another that supports 1inch). Before you can start trading 1inch and other cryptos you will need to verify your identity. This usually entails providing your address, Social Security number and a picture of your driver’s license. Now you can fund your account and start trading 1inch.
- Buy a wallet (optional).
The cryptocurrency community is nearly unanimous in that the safest place to store your cryptos is in a hardware wallet. Most also agree that keeping your cryptos in the trading platform you use is on the other end of the safety spectrum. Exchange hacks have lost users many millions of dollars worth of cryptocurrencies over the last decade. However, all of the exchanges recommended above employ incredible security measures to keep user cryptos safe. Even though these top exchanges have good security features, it’s still safer to use a hardware wallet. Software wallets lie in-between because you keep complete control over your cryptos, but the wallet information is still stored online. They are also almost always free and usually are the easiest to use.
- Make your purchase.
You can deposit either a fiat currency like USD or a supported cryptocurrency to fund your account. Most exchanges let you deposit USD with instant ACH deposits and wire transfers. Once you have the money you need in the exchange account just look for the trading pair with 1inch you want to use. Enter your desired price and make your purchase. You might want to transfer the tokens you don’t plan on trading soon to a personal wallet for security.
Cryptocurrency Wallets For 1inch
Best Hardware Wallet: Ledger
The leading hardware wallet brand in the entire industry is Ledger. Ledger offers 2 fantastic models with the same certified secure chip: the Ledger Nano S and Ledger Nano X. The secure chip generates and encrypts the private key for your wallet. The private key is the only way to access your cryptos and no one can see it, not even Ledger.
The Nano S is the simpler wallet and it's perfect for beginners. The Nano X adds a larger screen and Bluetooth functionality for a seamless on-the-go experience. Both devices support Bitcoin, Ethereum, Ripple, all ERC-20 tokens (including 1inch) and many more cryptos. If you’re looking for an incredibly secure cryptocurrency wallet that doesn’t sacrifice much ease-of-use, either of Ledger’s models is a great choice.
Best Software Wallet: Coinbase Wallet
It’s often important to have a software wallet either by itself or along with a hardware wallet to get the best of both worlds. Software wallets make interacting with DeFi platforms like 1inch exchange fast and simple. One of the best choices is Coinbase Wallet, made by the top exchange Coinbase. It supports a long list of cryptos such as Bitcoin, Ethereum, Ripple, all ERC-20 tokens (including 1inch) and many more. Coinbase Wallet has more features than most of its competitors like a swap tab, a place to store your non fungible tokens (NFTs) and a DeFi browser. You can use the DeFi browser to use 1inch exchange to swap cryptos at the best possible prices.
The price of 1inch will probably depend on the success of the protocol and the cryptocurrency market overall. If a major competing platform arises or the top cryptos enter a bear market, 1inch will likely fall in price.
Trade, Sell or Convert your 1inch
1inch is a volatile altcoin, prone to large price swings in either direction. This isn’t unusual for altcoins and cryptocurrencies in general, but you should know how to close your position before you buy 1inch. Luckily it’s easy to sell the token with any exchange that supports it. Navigate to the exchange you have an account with or another offering 1inch trading. Find the trading pair with 1inch and the asset you want to swap it for. Now just select the price you want to sell it for and finish the trade. Remember that if you transferred your tokens to a personal wallet you will need to move them back to an exchange to close your position.
Current Crypto Prices
Ethereum is leading the cryptocurrency market narrative with it's impending ETH 2.0 upgrade that is projected to occur in late 2022. However, despite this, the broader cryptocurrency market is still quite bearish. Currently, Ethereum is hovering around $3,000 and Bitcoin is hovering around $40,000 - both currencies down notably from their respective all time highs.
Is 1inch a Good Investment?
1inch could be a great investment, but, like all altcoins, it’s quite risky. In the last 8 months, the token’s price has moved rapidly from under $1 to above $7 and back down to about $2.75 at the time of writing. The DEX aggregator protocol is incredibly successful, and 1inch token will likely succeed if it continues to lead the industry. Popular altcoins also often follow Ethereum and Bitcoin and rarely see much upside in bear markets.
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