The 1INCH token is the native cryptocurrency of the 1inch Network, a leading decentralized exchange (DEX) aggregator in the blockchain ecosystem. This platform is designed to provide users with the most efficient trading routes by sourcing liquidity from various decentralized exchanges, ultimately offering better rates and lower transaction costs.
What Is the 1inch Network?
The 1inch Network operates as a decentralized exchange aggregator. Its core function is to scan multiple DEXs to find the best possible trading prices and the lowest slippage for its users. By splitting a single trade across several platforms, it maximizes efficiency and minimizes costs.
For example, if a user wants to sell 100 ETH, 1inch doesn't just route the trade through a single exchange. Instead, it might distribute portions of the trade across platforms like Uniswap, SushiSwap, Curve, and others. This method leverages the unique liquidity strengths of each exchange—Curve for stablecoins, Uniswap for major cryptocurrencies, and so on—resulting in significantly reduced slippage and cost savings.
Supported exchanges on the 1inch aggregator include Uniswap, Kyber, Aave, Balancer, Bancor, and many more. To date, the platform has saved users over $2.23 million in transaction fees, demonstrating its practical utility and growing adoption.
The 1INCH Token Economy
The 1INCH token has a total supply of 1.5 billion coins. The distribution is structured as follows:
- 30% for network security and maintenance (unlocked over 4 years)
- 22.5% for the core team and future employees (unlocked over 4 years)
- 21% for ecosystem growth (unlocked over 4 years, partially allocated to liquidity mining)
- 19.5% for investors and shareholders (unlocked over 2.5 years)
- 5% for advisors (unlocked over 4 years)
- 2% for early liquidity providers on Mooniswap (unlocked over 1 year)
At launch, 6% of the total supply was released, along with an additional 0.5% allocated to early liquidity mining incentives.
Liquidity Mining on 1inch
1inch has introduced liquidity mining programs to encourage user participation. Initial pools included:
- 1INCH-ETH
- 1INCH-DAI
- 1INCH-WBTC
- 1INCH-USDC
- 1INCH-USDT
- 1INCH-YFI
In the first two weeks, 7.5 million 1INCH tokens were distributed to liquidity providers. Future incentives are determined through community governance. Annual percentage yields (APYs) for these pools typically range between 30% and 80%.
Utility of the 1INCH Token
The primary use of the 1INCH token is governance. Holders can stake their tokens to vote on key protocol parameters, including:
- Swap fees
- Price impact fees
- Governance rewards
- Referral rewards
- Decay period settings
There are two main governance structures:
- Pool Governance: Focuses on parameters specific to individual liquidity pools.
- Factory Governance: Deals with global parameters that affect all pools.
Key Protocol Features
- Swap Fee: A fixed percentage charged on each trade.
- Price Impact Fee: A dynamic fee that increases with higher slippage, designed to benefit liquidity providers.
- Decay Period: A delay mechanism that helps protect against front-running and allows for fairer price adjustments.
- Governance Rewards: Incentives for stakers who participate in voting.
- Referral Rewards: Benefits for users who refer new participants to the platform.
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The Role of Aggregation Governance
The 1INCH token also plays a role in the aggregation mechanism. Stakers can vote on how spread surplus—the positive difference between quoted and executed prices—is distributed. Initially, this surplus is directed to referrers, but the community can change this via proposals.
Conclusion
As a top-tier DEX aggregator, 1inch effectively combines liquidity from multiple sources to reduce slippage and improve trade execution. With a strong governance model and growing user base, it stands as a major player in the DeFi space. That said, investors should remain cautious—with a fully diluted market cap of $1.5 billion, the token carries inherent market risks.
Frequently Asked Questions
What is the 1INCH token?
The 1INCH token is the governance token of the 1inch Network, a decentralized exchange aggregator. It allows holders to participate in decision-making for protocol parameters and incentives.
How does 1inch reduce trading slippage?
1inch scans multiple DEXs to find the best prices and splits large trades across several platforms. This combines liquidity from various sources, significantly reducing price impact and slippage.
Can I earn rewards with 1INCH?
Yes. You can provide liquidity in designated pools and earn farming rewards, or stake 1INCH tokens to participate in governance and receive incentives.
What is the decay period in 1inch?
The decay period is a time delay feature that helps prevent front-running and allows liquidity pools to adjust prices more fairly. It can be set between 1 to 5 minutes through governance.
Is 1inch better than Uniswap?
1inch aggregates multiple DEXs including Uniswap, often providing better rates thanks to optimized routing. However, each platform serves different needs—1inch for aggregation and Uniswap for direct liquidity provision.
Where can I trade the 1INCH token?
The 1INCH token is available on major cryptocurrency exchanges and can also be swapped directly through the 1inch aggregator for the best available price.