Decentralized finance (DeFi) took a major leap forward in late 2020 when 1Inch Exchange launched its native token, sparking widespread excitement across the crypto community. The project’s innovative approach to decentralized trading, combined with a generous airdrop, quickly positioned it as a key player in the DeFi space. But what exactly is 1Inch, and how can you leverage it for smarter, more efficient crypto swaps? This guide dives deep into everything you need to know — from its core technology to how you can use it today.
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What Is 1Inch Exchange?
Founded in 2019 by Anton Bukov and Sergej Kunz, 1Inch Exchange is a leading decentralized exchange (DEX) aggregator. Unlike traditional exchanges, DEXs enable peer-to-peer cryptocurrency trading without relying on a central authority — think of it as the FOREX market for digital assets, but fully decentralized.
While platforms like Uniswap, Kyber Network, and Oasis operate as standalone DEXs, they often offer varying prices and gas fees for the same tokens. This inconsistency creates inefficiencies for traders. 1Inch solves this problem by scanning multiple DEXs simultaneously to find the best possible swap rate across the entire DeFi ecosystem.
In essence, 1Inch doesn’t host its own order book. Instead, it acts as a smart routing layer that sources liquidity from over 33 different protocols to ensure users get optimal pricing, lower slippage, and reduced transaction costs.
How Does 1Inch Work?
At the heart of 1Inch’s functionality is its advanced aggregation algorithm. When you initiate a token swap — say, exchanging Tether (USDT) for Wrapped Bitcoin (WBTC) — the platform analyzes hundreds of liquidity pools across various decentralized exchanges in real time.
The algorithm evaluates several key factors:
- Best available exchange rate
- Network gas fees
- Available liquidity
- Expected slippage
It then determines whether to route your trade through a single DEX or split it across multiple platforms to minimize costs and maximize output. This process, known as "path optimization," allows 1Inch to outperform direct trades on individual exchanges.
For example, instead of swapping all your USDT on Uniswap at a less favorable rate, 1Inch might split the trade between Uniswap, SushiSwap, and Curve — capturing better pricing at each leg of the transaction.
This intelligent routing not only saves money but also improves trade execution speed and reliability, especially during periods of high network congestion.
The 1Inch Liquidity Protocol (Formerly Mooniswap)
In August 2020, before launching its governance token, 1Inch introduced Mooniswap, an automated market maker (AMM) designed to reduce impermanent loss — a common issue for liquidity providers on platforms like Uniswap.
Mooniswap uses a unique pricing mechanism that delays arbitrage opportunities slightly, making it harder for bots to exploit price discrepancies instantly. This design protects liquidity providers and ensures more stable returns over time.
After the launch of the 1Inch token, Mooniswap was rebranded as the 1Inch Liquidity Protocol, integrating deeper into the broader 1Inch ecosystem. Liquidity providers can now stake their assets and earn rewards in $1INCH tokens, further incentivizing participation and strengthening platform stability.
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How to Use 1Inch Exchange: A Step-by-Step Guide
Using 1Inch is straightforward and accessible to both beginners and experienced traders. Here’s how to get started:
Step 1: Access the Platform
Visit the official 1Inch Exchange website using any modern web browser. Ensure you're on the correct domain to avoid phishing scams.
Step 2: Connect Your Wallet
Click the “Connect Wallet” button at the top right. Choose a non-custodial wallet such as MetaMask, Trust Wallet, or WalletConnect. Confirm the connection in your wallet app.
Step 3: Select Tokens to Swap
Choose the token you want to send (e.g., USDT) and the one you want to receive (e.g., DAI). Make sure you have enough of the source token to cover both the swap amount and Ethereum gas fees.
Step 4: Approve Token Spending
Before your first swap, you’ll need to grant 1Inch permission to access your tokens. You can choose between:
- Approve: Authorizes a specific amount.
- Approve Infinite: Allows unlimited spending (saves gas on future swaps but requires trust in the platform).
Confirm this transaction in your wallet — it will incur a gas fee.
Step 5: Execute the Swap
Once approved, click “Swap Now.” Review the details, including estimated output and slippage tolerance. Confirm the transaction in your wallet, and wait for blockchain confirmation.
Your new tokens will appear in your wallet shortly after.
The 1INCH Token: Governance and Utility
Launched on December 25, 2020, the **$1INCH token** marked a pivotal moment for the platform. Distributed via an airdrop to early users, it generated massive buzz — with the token briefly reaching $2 on Binance shortly after listing.
Key Features of $1INCH:
- Total Supply: Approximately 1.5 billion tokens
- Distribution Period: Over four years
- Token Type: ERC-20 governance token on Ethereum
Holders of $1INCH can participate in platform governance by voting on proposals related to upgrades, fee structures, and ecosystem development. This decentralized decision-making model empowers users and aligns incentives across the community.
The initial airdrop rewarded active traders, but a second distribution in February 2021 expanded eligibility to include regular Uniswap users, further broadening adoption.
As of early 2025, $1INCH remains listed on major exchanges including Binance, Huobi Global, Uniswap, and directly on 1Inch Exchange.
Frequently Asked Questions (FAQ)
Q: Is 1Inch safe to use?
A: Yes. As a non-custodial platform, 1Inch never holds your funds. You maintain full control via your wallet. However, always verify URLs and review transaction details before confirming.
Q: Does 1Inch support multiple blockchains?
A: Yes. While initially built on Ethereum, 1Inch now supports swaps on BNB Chain, Polygon, Optimism, Arbitrum, and other EVM-compatible networks.
Q: What is slippage, and how does 1Inch handle it?
A: Slippage is the difference between expected and executed price due to market volatility. 1Inch lets you set slippage tolerance (e.g., 0.5%–2%) to prevent unfavorable trades.
Q: Can I earn rewards on 1Inch?
A: Yes. By providing liquidity through the 1Inch Liquidity Protocol or participating in staking programs, users can earn $1INCH rewards.
Q: Are there gas fees when using 1Inch?
A: Yes. Since trades occur on-chain, you must pay network gas fees. However, 1Inch optimizes routes to reduce overall costs.
Q: How do I claim an airdrop if one happens?
A: Past airdrops were automatically distributed to eligible wallets. No action was needed beyond using the platform before snapshot dates.
Core Keywords
- 1Inch Exchange
- DEX aggregator
- $1INCH token
- DeFi trading
- Automated Market Maker (AMM)
- Crypto swap
- Liquidity protocol
- Decentralized finance
Final Thoughts
Since its launch in 2019, 1Inch Exchange has emerged as a cornerstone of efficient DeFi trading. Its powerful aggregation engine, commitment to user savings, and robust governance model make it a go-to platform for anyone serious about decentralized swaps.
With continued innovation — including cross-chain support, improved liquidity protocols, and community-driven development — 1Inch is well-positioned to remain at the forefront of the DeFi revolution.
Whether you're swapping tokens for the first time or optimizing large-volume trades, 1Inch offers tools that enhance both performance and control in the fast-evolving world of decentralized finance.