Killer Whale Crypto
September 30, 2021, 7:43 AM UTC
1 Inch and the corresponding 1INCH token is one of the most interesting projects in the DeFi space. 1 Inch is a fantastic DEX Aggregator and Automated Market Maker. 1INCH is one of the most progressive DeFi governance tokens, and has earned its place on the Killer Whale Suggested Coin List!
1 Inch (1INCH) Review
The world of DeFi is filled with all kinds of Decentralized Exchanges, or DEXes, and many of them operate by and large the same way. The biggest difference between DEXes such as SushiSwap, PancakeSwap, UniSwap, Curve and many others, is their individual going exchange rates. To make matters more complicated, the exchange rates for each of these DEXes are constantly fluctuating. SushiSwap can have some of the highest rates one day, and some of the lowest rates the next. For this reason, it can be a bit of a hassle for DeFi users to dig through all these different DEXes when looking for the most advantageous DEX to swap out their ERC-20 tokens.
This is where 1 Inch comes into play. In this article we will be discussing the 1 Inch DEX aggregator, as well as the 1INCH token. We will also talk about why Killer Whale has interest in this project.
What is 1 Inch?
I inch is a DEX aggregator – as we mentioned – as well as an Automated Market Maker, or AMM. It is easiest to look at these two components of 1 inch separately, even though they work together like two hemispheres of the same brain. We will start with the DEX aggregator component.
As the name suggests, DEX aggregators are algorithms which search through a collection of Decentralized Exchanges to find the most efficient swap route for the user to exchange their tokens. 1 Inch searches through 33 different liquidity protocols, to facilitate the most efficient means of token swapping, by calculating multiple variables. These variables include price, slippage, and liquidity to name a few.
Automated Market Makers
Automated Market Makers or AMMs are also quite common in DeFi. 1 Inch however, has some improved features which set it apart from other AMMs. Most AMMs use the Constant Product Invariant Equation to identify price swaps within a pre-funded liquidity pool. It works by ensuring that the product number of tokens per pool is equal to a constant. 1 Inch uses the Constant Product Invariant Equation as well, although the way it utilizes the equation is slightly different. Simply put, 1 Inch uses a 5 minute time-delay sequence in its Constant Product Invariant Equation in order to smooth out the sharp variations in exchange rates and reduces profits for arbitrage traders.
The 1 Inch token, 1INCH
1INCH is a governance token, deriving its value from the voting rights that come with it. The idea is that the more users of 1 Inch feel incentivized to govern the network, the more likely they will want to accumulate 1INCH. Although there are many governance tokens like this within the DeFi space, 1INCH differs from the rest, as it requires no barrier to entry. Any amount of 1INCH staking grants governance access to the holder because there is no minimum staking threshold to participate. Those who stake any amount of 1INCH can immediately vote on:
1INCH has expressed some great price action since its inception. On top of that, the 1 Inch project itself is one of the most useful in the DeFi space. For these reasons 1INCH has earned its place on the Killer Whale Suggested Coin List!
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