What is 1inch?
1inch (1INCH) is the native token for the 1inch cryptocurrency Exchange. Its purpose is to be used as a utility token to allow community governance settings on exchange and blockchain.
1inch is a decentralized exchange (DEX) aggregator, which creates a bridge between other DEXs and allows them to swap orders across within the network. Founded in 2019, 1inch Exchange has been thriving as it provides an effective solution for crypto transactions.
When buying and selling coins on an exchange, slippage refers to the gap between the desired price and the actual outcome. These changes are likely to take place, especially on a less popular exchange or if the trading pair is less liquid.
That’s where 1inch Exchange comes into the picture.
By connecting multiple DEXs, 1inch is able to spread orders across various exchanges, search for matched offers, and reduce the possibility of slippage. By utilizing arbitrage bots, 1inch Exchange empowers order handling and processing capacity, and an order can be completed in a short time – while saving a great deal of costs to the trader.
Along with 1inch’s rapid growth at the exchange level, its core team realized that a fast-evolving DeFi system would need a token to help it become as efficient as possible, and as a result, they launched 1INCH.
What is the Purpose of 1inch (1INCH)?
1INCH can be seen as the lifeblood that runs through the veins of the 1inch Exchange network. Created under a decentralized autonomous organization model, 1INCH has the ambition to renovate and bring DAO to a higher level, promising to be more efficient, user-friendly, and reliable than other systems.
The token gives its holders the right to have a say in running 1inch’s instant governance model, which seeks to remove barriers and allow holders to freely take part in voting for any protocol settings.
The instant governance model assures the community a more transparent environment where they can trade and benefit from their holdings, and at the same time, their voices are listened to and recognized.
Initially, there would be 2 co-existing governance modules operated by 1INCH token holders and the team, which are the Aggregation Protocol module to determine the allocation of Spread Surplus coins and the Liquidity Protocol module enabling voting on other major matters, such as fees and rewards.
As 1inch Exchange wants to continue with its expansion, 1INCH will be the main token for any future protocols and become the backbone of the whole 1inch ecosystem.
How Does 1inch (1INCH) Work?
Launched on Christmas 2020 through an airdrop, 1INCH tokens were a special present for crypto fans. In the airdrop, 90 million tokens, equal to 6% of the total float of 1.5 billion tokens were gifted to any holders who met a set of simple conditions.
As mentioned before, all operations of the 1inch protocols are made possible by 1INCH tokens.
In the Aggregation Protocol, Spread Surplus coins, which are generated based on a higher rate of the aggregator compared with users’ expected rate, will be distributed for governance and referral rewards with the proportions determined by the DAO.
In the Liquidity Protocol (previously known as Mooniswap), the 1inch team utilizes smart contracts to enhance the swaps and incentivize liquidity providers, as well as prevent unfair slippages.
Spread Surplus coins created and distributed from the Aggregation Protocol are also converted into 1INCH tokens through this Liquidity module.
Since the beginning of 2021, with the newly upgraded 1inch Liquidity Protocol, both stakers and liquidity providers can participate in voting for protocol settings, along with joining the new exciting mining program.
With the current 6 pools paired with 1INCH, participants can receive an average of 300% Annual Percentage Yield (APY) upon their contribution to the network liquidity.