1inch (Ethereum DEX): The Ultimate Guide to Decentralized Trading

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1inch is a powerful decentralized exchange (DEX) aggregator that has transformed the way users trade cryptocurrencies across multiple blockchains. By scanning liquidity from various decentralized exchanges, 1inch ensures traders receive the best possible rates while minimizing fees and slippage. Whether you're swapping ERC-20 tokens on Ethereum or trading on emerging Layer 2 networks, 1inch streamlines the process with speed, efficiency, and user control.

This guide dives deep into how 1inch works, its core features, supported tokens, fee structure, earning opportunities, and the role of the 1INCH token. We'll also explore the pros and cons to help you decide if 1inch aligns with your crypto trading goals.

What Is 1inch?

1inch is a decentralized exchange aggregator designed to optimize cryptocurrency trades by sourcing liquidity from multiple DEXs across different blockchain networks. Instead of manually checking rates on Uniswap, SushiSwap, Curve, and others, 1inch automatically scans these platforms to find the most favorable swap prices.

Developed by 1inch Labs—a team of open-source developers—the protocol operates under community governance via the 1inch DAO (Decentralized Autonomous Organization). This means token holders can vote on upgrades, treasury allocations, and future developments, ensuring a truly decentralized ecosystem.

The platform’s primary goal is to reduce trading costs and improve execution efficiency through smart routing algorithms and innovative tools like limit orders and gas optimization.

👉 Discover how decentralized trading can maximize your crypto returns—explore secure swap options today.

Which Tokens Can You Trade on 1inch?

As a multi-chain DEX aggregator, 1inch supports a wide range of tokens across several major blockchain networks:

This broad compatibility allows users to swap thousands of tokens—including stablecoins like USDC and DAI, governance tokens, and emerging DeFi assets—without leaving the platform. Since 1inch pulls liquidity from numerous sources, even low-volume tokens often have viable trading pairs with competitive pricing.

For traders focused on cross-chain activity or those using Layer 2 solutions to avoid high Ethereum gas fees, 1inch offers seamless integration across ecosystems.

How to Use 1inch: A Step-by-Step Guide

Using 1inch is straightforward once you understand the basics:

Step 1: Connect Your Wallet

Supported wallets include:

Simply visit the 1inch app and click “Connect Wallet” in the top-right corner.

Step 2: Ensure You Have Network Funds

Make sure your wallet contains native coins (ETH, BNB, MATIC, AVAX, or xDAI) to cover gas fees for transactions.

Step 3: Select Your Trade

Choose the token you want to swap and the one you wish to receive. 1inch will instantly display the best available rate after factoring in slippage, fees, and network costs.

Step 4: Adjust Settings (Optional)

You can modify slippage tolerance (recommended: 0.5%–1% for stablecoins, higher for volatile tokens) or enable limit orders if you're waiting for a specific price.

Step 5: Execute the Swap

Confirm the transaction in your wallet. The trade executes directly on-chain—no intermediaries involved.

How Does 1inch Work?

At its core, 1inch uses an intelligent routing engine called the Pathfinder Algorithm to split large trades across multiple DEXs for optimal pricing. For example, instead of executing an entire ETH-to-USDT swap on a single exchange with poor liquidity, 1inch might route part of the trade through Uniswap and another through SushiSwap to minimize price impact.

Key features include:

Users can choose between two interface modes:

Understanding 1inch Fees

One of 1inch’s biggest advantages is that it charges no platform fees for swaps, deposits, or withdrawals. However, users still pay standard blockchain network fees (gas fees), which vary depending on network congestion.

To help reduce Ethereum gas costs, 1inch introduced the CHI token, a gas-abstraction tool that locks up ETH during high-fee periods and releases it when gas is cheaper. By burning CHI tokens during transactions, users effectively lower their overall gas expenses.

You can acquire CHI by:

While CHI only applies to Ethereum-based trades, it's a valuable tool for frequent traders aiming to cut long-term costs.

Earn Passive Income on 1inch

Beyond trading, 1inch enables users to earn yield through liquidity provision. By depositing token pairs into designated liquidity pools, users contribute to market depth and are rewarded in return.

Here’s how it works:

Additionally, users who provide liquidity to specific 1inch pools may earn 1INCH governance tokens as incentives—a way to further engage with the protocol’s ecosystem.

👉 Start earning yield on your idle crypto assets with optimized liquidity strategies.

The 1INCH Token: Governance and Utility

The 1INCH token serves as the native utility and governance token of the 1inch Network, available on both Ethereum and Binance Smart Chain. It plays a critical role in decentralizing decision-making through the 1inch DAO.

Key Uses of 1INCH:

Originally distributed via an airdrop in 2020 to early users and liquidity providers, the token continues to incentivize participation. Today, you can acquire 1INCH by:

Holding 1INCH not only grants voting power but also aligns users with the long-term success of the platform.

Frequently Asked Questions (FAQ)

Q: Is 1inch safe to use?
A: Yes. As a non-custodial platform, 1inch never holds your funds. You retain full control of your private keys at all times. Always verify the official website URL to avoid phishing scams.

Q: Can I use fiat currency on 1inch?
A: No. 1inch only supports crypto-to-crypto swaps. You must first purchase cryptocurrency through a centralized exchange before trading on 1inch.

Q: Does 1inch charge trading fees?
A: No direct fees. However, standard blockchain gas fees apply when processing transactions.

Q: Is 1inch available in the United States?
A: Currently, 1inch does not offer services licensed for U.S. residents due to regulatory constraints.

Q: How do I reduce gas fees on Ethereum when using 1inch?
A: Use the CHI token to offset high gas costs. You can mint CHI during low-congestion periods and burn it during swaps.

Q: Can I stake my 1INCH tokens?
A: Yes. You can stake 1INCH in designated vaults or farms to earn additional yield or boost governance influence.

Pros and Cons of Using 1inch

✅ Advantages

❌ Limitations

Is 1inch Right for You?

If you value privacy, decentralization, and cost-efficient trading, 1inch is one of the top choices in the DeFi space. Its ability to scan dozens of exchanges in real time ensures you get the best possible deal every time you swap tokens.

However, if you're new to crypto or prefer buying Bitcoin with a credit card, you might find centralized exchanges more user-friendly. Similarly, U.S. traders will need to explore alternative platforms due to access restrictions.

For experienced users who want full control over their assets and seek advanced trading tools across Ethereum and Layer 2 networks, 1inch delivers unmatched flexibility and performance.

👉 Maximize your DeFi potential with smarter swaps and lower fees—see what’s possible today.