What is 1inch Network?

By Mohammad Musharraf

1inch is the crypto exchange aggregator, named after Bruce Lee’s famous knock-out blow. The one-inch punch was said to vanquish any opponent, instantly – such was the ambition of 1inch founders when they launched their project. But what exactly is an exchange aggregator, and how can it benefit you? Let’s take a closer look at 1inch, and why it’s got people talking.

What Exactly Is 1inch?

Simply put, 1Inch is a DEX aggregator that searches through dozens of decentralized crypto exchanges. Allowing you to find the most favorable exchanges for your tokens.

The most complex and sometimes frustrating is the task of finding the best exchange rates and lowest transaction fees across the different DEXs. That’s because the prices of tokens on different DEXs often vary, and so do the fees. 

This is where 1inch comes in. Think of it like a hotel aggregator platform such as Trivago or Kayak. A quick search for a room on these platforms can bring up the best rates across different travel websites. You can book the hotel of your choice at the best rate. All from the same portal instead of switching to another website.

Now, replace the hotels with crypto tokens and travel websites with DEXs, and you will have 1inch.

How Does 1inch Work?

The platform’s central proposition is finding you the best prices for your trades from among many different DEX’s. To achieve this, 1inch uses a method called “routing”. This sees the platform integrate a specialized algorithm called Pathfinder to parse through every possible option for making your chosen exchange. Automatically “routing” your transaction via the most cost-effective path. One of the most useful features of 1inch is that it will automatically split your trade across multiple trading liquidity pools. This yields the best return, enabling you to find the best possible options within seconds.

Why Use 1inch? What Are The Benefits?

1inch provides a number of stand-out benefits to its users. Let’s take a look at some of the main advantages of using this platform to make crypto exchanges.

A Faster Way to Exchange

As you might expect from a comparison platform, one of 1inch’s key benefits is that it saves you time. Whereas previously, finding the best deal for your exchange meant laboriously sifting through multiple exchanges. 1inch does this instantly by leveraging its algorithm across more than 80 decentralized exchanges. This means you accomplish the same objective with less time invested.

Slippage Fades Away

In case you’re not familiar with the term slippage, let’s start with a brief summary. “Slippage” is the movement in the price of a commodity between the moment you confirm the transaction and the moment the trade actually takes place. This creates a lack of certainty for traders who, ultimately, can’t be completely sure how much they will pay for their exchange by the time it’s processed. 

Slippage is particularly problematic in crypto markets due to the volatility of crypto prices. The time it takes for new transactions to be validated. Sometimes, causing delays by a lack of liquidity for larger trades, all of which contribute to pricing uncertainty.

By splitting trades across multiple pools, it is less likely that lack of liquidity will hinder your transaction. Bringing better transparency and accuracy to transaction pricing.

Better Returns On Trades

If you’ve ever made a crypto transaction, you’ll be well aware of our old friend, gas fees. These are the payments required each time you send your crypto or stablecoins to another wallet, rewarding the network validators for maintaining the blockchain. 

A nifty feature of the 1inch interface is that it allows you to reduce your transaction costs by locating the trading routes with the lowest gas fees. Alternatively, you can also prioritize the routes with the higher overall returns.

With all results easily sorted and displayed on one interface. 1inch makes it easy for you to locate the best deal.

Security and Ownership of Your Keys

Just in case you’d forgotten, let’s say it again: not your keys, not your coins. 

One of the key benefits of using 1inch is that you retain full ownership of your coins while you trade. As a non-custodial platform, using 1inch means your funds will always be tied to your own private key, and not that of the exchange. This empowers you with maximum control and security while you’re exchanging.

How to Use the 1inch Interface

If it’s your first time using the 1inch interface, you might be wondering how to approach it – you are not alone! Let’s take a walk through the various features of the interface and how you can use them to benefit your own trades.

To begin with, let’s look at the homepage. Let’s say you want to exchange ETH for Aave: you select ETH in the pay box, and AAVE in the receive box.

The algorithm will automatically generate the best deal for this trade, which you can then prioritize. Be it by lowest gas fee or by highest return – using the two buttons at the bottom of the control panel.

On the left of the screen, the interface shows what you would have paid for the same deal on other exchange platforms. This allows you to compare your deal easily.

You’ll notice that the exchange dashboard shows the transaction cost within the breakdown of your exchange:

This is your gas fee, and no matter what you’re swapping, you’ll also need enough ETH in your wallet to cover this cost.

Once you’ve had a chance to inspect all elements of your deal and are happy with what you’ve found, hit the “swap token” button. This will take you to a final screen, where any change in price will be shown to you before you confirm. 

If you’re still happy with the deal you’ve found, it’s time to exchange!

Ledger Live: The Safest Way To Exchange Ethereum on 1inch

If you’re keen to start using 1inch and want to maximize your security, there’s great news: it’s recently been integrated within the  Ledger Live  ecosystem. This means you can find the very best exchange for your Ethereum tokens from within the security of the Ledger Live platform. All the while using a Ledger device that keeps your private keys offline. 

How does this look in practice? For every 1inch transaction made through Ledger Live, you will need to give your approval using the trusted display of your Ledger wallet. By confirming your transactions using the trusted display of your hardware wallet, you eliminate the risks of blind signing. Meaning that this step alone greatly enhances your security by making all of your transactions completely transparent.

Since your private keys are stored in the Ledger device, it is impossible to access the key and approve the transaction without you connecting the wallet to your mobile/desktop and physically approving the transaction yourself.

Ease of use, security, and ownership under one roof: no, you’re not dreaming. 

Time to Exchange With 1inch

Platforms like 1inch contribute to the betterment of the overall DeFi user experience. Not only by enabling you to find the most favorable conditions for your token exchanges, but by further decentralizing (and better distributing) control and transparency among regular crypto users.

With 1inch spanning a vast array of DEXs across three major blockchains – and showing no sign of slowing down – it seems the DEX aggregator may well be delivering the knock-out blow it was aiming for.

Knowledge is Power.

Trust yourself and keep on learning! If you enjoy getting to grips with crypto and blockchain, check out our highly entertaining School of Block episode all about earning passive income from your crypto.

Disclaimer: Exchange, lend, and other crypto transaction services are provided by third-party partners. Ledger provides no advice or recommendations on use of these third-party services.