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1inch (Ethereum DEX)

At A Glance

  • 1inch is a DEX aggregator that compiles price data for cryptos across multiple exchanges to deliver its users the best rates and fees for trading. 
  • The 1INCH token is used for the protocol’s governance.

If you are looking to trade crypto pairs safely and anonymously while retaining full custody of your private keys, DeFi exchanges are the way to go. Among DeFi exchanges, we find 1inch, a DEX aggregator which pools data from multiple exchanges to find the best trading rates and fees.

In this guide, we’ll take a look at the 1inch DEX, how it works and the trading features it offers. Here’s what we’ll cover:

  • What is 1inch?
  • What tokens can you trade on 1inch?
  • How to use 1inch?
  • How does 1inch work?
  • 1inch Fees
  • Earn on 1inch
  • 1INCH Token
  • 1inch Pros
  • 1inch Cons

What is 1inch?

1inch is a DeFi exchange aggregator that allows you to trade crypto in the most cost effective way. It works by examining price data from multiple exchanges to find the best trading rates for its users. Trades are executed by the exchange that is able to provide the best rate for the coin swap and can even be split across more than one exchange. 

A key contributor to the 1inch Network is 1inch Labs, a decentralized group of software builders that develop a range of open-source protocols governed by users through the 1inch DAO.

What tokens can you trade on 1inch?

As a DEX aggregator, 1inch helps you find the cheapest available swaps for Ethereum (ERC-20), Binance Smart Chain, Polygon, Optimism, Arbitrum, Avalanche, or Gnosis / xDAI network tokens. 

How to use 1inch?

1inch dex

All you need to do to start using 1inch is to connect your wallet to the platform. The following wallets are supported:

  • 1inch wallet
  • MetaMask
  • WalletConnect
  • Ledger
  • Portis
  • MEW (MyEthereum Wallet)
  • Torus
  • Fortmatic
  • Bitski
  • Authereum
  • Binance Chain Wallet
  • Arkane

Make sure that your wallet has funds (ETH, BNB, MATIC, AVAX, or xDAI) to use for trading and to cover gas fees.  

Once you’re set-up, you can start trading. Simply select the currencies you want to exchange and 1inch will find you the best deal, factoring fees and gas. Make sure you check that you have enough funds to cover the transaction fee, and adjust slippage tolerance if needed. 

How does 1inch work?

1inch works by finding the best rates for trades by comparing prices across several exchanges. This way users can easily find the most affordable option to swap coins. If necessary, 1inch can split a trade between several exchanges in order to get its users a better deal. Furthermore, 1inch allows you to set limit orders, in which you set a limit on the price you are willing to pay for a trade. In this case, the trade won’t be executed unless a trade that matches your limit is found.

Users can access the 1inch app on two different interfaces: Simple Mode and Classic Mode. Simple Mode provides a more user-friendly experience, while the Classic Mode offers live charts, limit orders and other advanced features.

1inch Fees

1inch doesn’t charge any fees itself or charge fees for withdrawals and deposits, however, there are still some fees involved in transactions. This is because trades are processed by the blockchain networks on which 1inch runs, which charge gas fees for processing transactions. The busier the network is, the higher the fees.

If you want to reduce the gas fees you pay when using 1inch, you can do so by using 1inch’s CHI token to cover the fee cost. Chi is tokenized gas on the Ethereum network that can be burned to cover transaction costs, making trading overall more affordable. To get CHI tokens, you can  swap coins for Chi through the Uniswap liquidity pool or mint on 1inch directly.

Earn on 1inch

Using 1inch, you can also earn on your crypto by contributing to a liquidity pool. These currency pools provide liquidity for trading. Users that contribute are rewarded with tokens which can then be staked or exchanged.

1inch Token

1inch has its own token, 1INCH, available on Ethereum and Binance Smart Chain networks. It is used to govern the protocol. Initially, the token was distributed to the network’s users in an airdrop in 2020. You can earn 1INCH tokens by providing liquidity to 1inch liquidity pools or trade the token through an exchange.

1inch Pros

  • 1inch supports a variety of crypto wallets
  • There are no 1inch, withdrawal or deposit fees
  • You can reduce gas fees with the CHI token.

1inch Cons

  • Not licensed in the US 
  • 1inch doesn’t support the use of fiat currencies for trading.
  • The 1inch platform, like other DeFi solutions, can be intimidating and difficult to navigate for beginners.

Is 1inch right for you?

If you are looking to swap crypto-to-crypto at affordable fees while keeping custody of your assets, 1inchs is one of the best options out there. However, total beginners or users looking for crypto-to-fiat trades should consider other options that are more suitable to their needs.