1Inch Exchange: The Complete Guide

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Decentralized finance (DeFi) took a bold leap forward in late 2020 when 1Inch Exchange made headlines with the launch of its native token and a highly anticipated airdrop. What started as a simple DEX aggregator has evolved into a powerful ecosystem reshaping how users swap tokens across blockchains. In this comprehensive guide, we’ll explore everything you need to know about 1Inch — from how it works and why it matters, to how you can use it safely and efficiently.

Whether you're new to DeFi or a seasoned trader, understanding 1Inch is essential for optimizing trades, reducing gas costs, and participating in decentralized governance.

What Is 1Inch Exchange?

Launched in 2019 by developers Anton Bukov and Sergej Kunz, 1Inch is a decentralized exchange (DEX) aggregator designed to solve one of the biggest challenges in DeFi: fragmented liquidity. Unlike traditional exchanges, DEXs operate without central authorities, enabling peer-to-peer crypto trading directly from your wallet.

While platforms like Uniswap, SushiSwap, and Kyber Network offer liquidity pools for trading, each has different prices, fees, and slippage levels. This fragmentation means you might not always get the best rate on a single exchange. That’s where 1Inch steps in.

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As an aggregator, 1Inch scans over 30+ liquidity sources across multiple blockchains — including Ethereum, Binance Smart Chain, Polygon, and Optimism — to find the most efficient trade path. The result? Better prices, lower slippage, and optimized gas usage.

How Does 1Inch Work?

At its core, 1Inch uses advanced algorithms to split large trades across multiple DEXs, ensuring users receive the best possible execution. Here's how it works:

When you initiate a token swap — say, exchanging USDT for WBTC — 1Inch’s protocol evaluates pricing data from various decentralized exchanges simultaneously. It then determines whether to route your trade through:

This process, known as "path optimization," considers several key factors:

For example, instead of swapping USDT → WBTC directly on Uniswap (which might have high slippage), 1Inch could route USDT → DAI → WBTC via Curve and SushiSwap, saving you money and improving execution speed.

The platform also supports limit orders, gasless approvals, and privacy-preserving transactions, making it one of the most user-centric tools in DeFi.

The 1Inch Liquidity Protocol (Formerly Mooniswap)

In August 2020, 1Inch launched Mooniswap, an innovative automated market maker (AMM) designed to reduce impermanent loss — a common issue for liquidity providers on platforms like Uniswap.

Traditional AMMs are vulnerable to arbitrage traders who exploit price differences between exchanges, often at the expense of liquidity providers. Mooniswap combats this with a delayed price oracle mechanism, which introduces a time delay in price updates, effectively penalizing rapid arbitrage bots.

Although Mooniswap was eventually rebranded as the 1Inch Liquidity Protocol after the launch of the $1INCH token, its underlying principles continue to influence how 1Inch manages on-chain liquidity and rewards contributors.

How to Use 1Inch Exchange: Step-by-Step

Using 1Inch is straightforward — no registration or KYC required. All you need is a non-custodial wallet like MetaMask, Trust Wallet, or WalletConnect.

Here’s how to make your first swap:

Step 1: Access the Platform

Visit the official 1inch app in your browser. Always double-check the URL to avoid phishing sites.

Step 2: Connect Your Wallet

Click “Connect Wallet” at the top right. Choose your wallet provider (e.g., MetaMask), approve the connection in your wallet app, and confirm.

Step 3: Select Tokens

Choose the token you want to trade from (e.g., USDT) and the one you want to receive (e.g., DAI). Make sure you have enough ETH (or native gas token) to cover transaction fees.

Step 4: Approve Token Spending

Before swapping, you must grant 1Inch permission to access your tokens. You can choose:

⚠️ Use “Unlock Infinite” cautiously — only with trusted platforms.

Step 5: Execute the Swap

Review the estimated output, slippage settings (default is usually safe), and click “Swap Now.” Confirm the transaction in your wallet, and wait for blockchain confirmation.

And that’s it — your trade is complete!

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Understanding the $1INCH Token

The $1INCH token is the native governance token of the 1Inch Network. Launched on December 25, 2020, it marked a major milestone in the platform’s decentralization journey.

With a total supply of 1.5 billion tokens, distribution occurs over four years through:

Key Features of $1INCH:

Following its successful initial airdrop — which saw early adopters earn thousands in free tokens — 1Inch conducted a second round in February 2021, distributing 15 million additional tokens to users across Uniswap and other DeFi platforms.

Today, $1INCH is listed on major exchanges such as Binance, Huobi Global, and Uniswap, making it accessible to traders worldwide.

Where to Buy $1INCH

You can purchase $1INCH on both centralized and decentralized platforms:

Always verify contract addresses when buying on DEXs to avoid scams.

Frequently Asked Questions (FAQ)

Q: Is 1Inch safe to use?
A: Yes — 1Inch is non-custodial, meaning your funds never leave your wallet. However, always verify URLs, review transaction details before confirming, and avoid granting unnecessary permissions.

Q: Does 1Inch charge fees?
A: The platform charges a small 0.3% fee on certain trades, part of which goes to referral partners. Otherwise, you only pay standard blockchain gas fees.

Q: Can I earn passive income with 1Inch?
A: Yes — through liquidity provision on the 1Inch Liquidity Protocol or by staking $1INCH in governance pools.

Q: What blockchains does 1Inch support?
A: Ethereum, BNB Chain, Polygon, Optimism, Arbitrum, Gnosis Chain, Aurora, and more — with ongoing expansion.

Q: Was there a free airdrop for users?
A: Yes — two major airdrops occurred in late 2020 and early 2021. While no active drops are running now, staying engaged with the ecosystem increases chances for future rewards.

Q: How does 1Inch compare to Uniswap?
A: While Uniswap is a standalone DEX, 1Inch is an aggregator that scans Uniswap and dozens of other platforms to deliver superior pricing and efficiency.

Final Thoughts

Since its launch in 2019, 1Inch Exchange has become a cornerstone of the DeFi landscape. By combining intelligent routing, low slippage, cross-chain compatibility, and community-driven governance via the $1INCH token, it empowers users to take full control of their digital assets.

As DeFi continues to grow and evolve, tools like 1Inch will play an increasingly vital role in making decentralized trading accessible, efficient, and profitable for everyone.

Whether you're swapping tokens daily or exploring new ways to participate in Web3 governance, integrating 1Inch into your toolkit is a smart move.

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1Inch Exchange, DEX aggregator, $1INCH token, DeFi trading, crypto swap, liquidity protocol, automated market maker, blockchain security