1INCH Complete Guide: The Core of DeFi That Even Beginners Can Understand
Introducing 1INCH
1INCH is not just another cryptocurrency. It's a smart protocol that revolutionizes trading on decentralized exchanges (DEX). You can think of it as a price comparison site that compares multiple shopping malls at once and finds the cheapest products.
The core of 1inch network is 'aggregation' technology. It searches prices from dozens of different DEXs at the same time and finds the optimal route for the transaction the user wants. In this process, transaction costs can be saved by up to 90%.
In the DeFi (decentralized finance) ecosystem, 1inch network acts like a traffic policeman. It guides users to trade on the most efficient route among the complex and scattered exchanges.
The exciting history of 1inch network
The background of 1inch network's birth is really interesting. In 2019, the DeFi market was still in its early stages, and various DEXs were operating in their own ways. The problem is that even for the same cryptocurrency, the price varies from exchange to exchange.
The founders witnessed this inefficiency and wondered, """"Why do users have to check multiple exchanges one by one to find the best price?"""" The 1inch Network, which started with this problem in mind, initially operated only on the Ethereum network, but currently provides services on more than 10 blockchains, including Binance Smart Chain, Polygon, and Avalanche.
Fun fact: The name 1inch comes from the meaning of """"finding the best price without any concessions."""" It contains the development team's determination not to miss even the smallest differences.
The Amazing Working Principle of 1inch Network
If you understand how 1inch Network works, you can see why this protocol is innovative. The key is a special technology called the 'Pathfinder' algorithm.
Let's say a user wants to exchange Coin A for Coin B. In a typical DEX, you simply exchange directly from A to B, but 1inch Network is different. Sometimes, the route from A to C to D to B can be more advantageous. Just like when you are on your way to your destination, sometimes a detour is faster than a highway.
Real Example: When you exchange 100 ETH for USDC, you can receive 150,000 USDC on Uniswap, but through 1inch Network, you can receive 152,000 USDC by combining multiple routes. The difference of 2,000 USDC is not small!
1inch Network also provides a 'partial order splitting' function. It minimizes slippage (price fluctuations) by dividing large transactions into several smaller transactions and executing them on different exchanges.
1inch Network's Various Use Cases
1inch Network's scope of use is much broader than you might think. It is used for various purposes across the DeFi ecosystem beyond simple coin exchanges.
Liquidity Provision: 1inch Network also operates its own liquidity pool. Users can deposit their cryptocurrencies and receive a portion of the transaction fees as a reward. This is a similar concept to deposits at traditional banks, but with much higher yields.
Staking: 1INCH token holders can stake their tokens to earn additional returns. At the same time, you also get the right to participate in network governance.
Real-life application example: When you want to buy a cheaper NFT from an overseas exchange, you can exchange it for the cryptocurrency you need while minimizing the fee through 1inch network. This is especially useful for artists and collectors.
Exchanges linked to 1inch network
The real power of 1inch network comes from the diversity of the exchanges it is linked to. Currently connected to over 100 DEXs, with new partnerships constantly being formed.
Major Partner Exchanges:
• Uniswap: The largest Ethereum-based DEX with high liquidity
• SushiSwap: A multi-chain DEX that supports multiple blockchains
• PancakeSwap: The flagship DEX on Binance Smart Chain
• Curve: A DEX specialized in stablecoin exchanges
• Balancer: A DEX that acts as an automated portfolio manager
Thanks to these various integrations, 1inch Network users can make optimal trades from a vast array of options, as if they were shopping in a huge shopping mall.
The Active 1inch Network Community
The community of 1inch network is truly impressive. It is not just a group of people who trade tokens, but a group of innovators who are creating the future of DeFi together.
Community Activities:
Discord and Telegram are actively discussing 24 hours a day. Developers directly participate to receive feedback from users in real time and reflect it in product development. They also maintain transparent communication through regular AMA (Ask Me Anything) sessions.
In particular, 1inch network returns direct value to the community through the 'Buyback and Burn' program. By purchasing 1INCH tokens with a portion of the profits generated from the protocol and burning them, the scarcity of the token is increased.
1inch network wallet setup guide
You need a Web3 wallet to use 1inch network. For first-time users, here’s a detailed explanation.
Recommended wallets:
• MetaMask: The most popular and easy-to-use wallet. It supports both browser extensions and mobile apps.
• Trust Wallet: A wallet developed by Binance that supports multiple blockchains.
• Coinbase Wallet: A wallet provided by Coinbase that provides a beginner-friendly interface.
Security Tips:When setting up your wallet, keep your seed phrase (recovery phrase) in a safe place. This is the only way to recover your wallet. Never store it online or share it with anyone!
Connecting your wallet is really simple. Just go to the 1inch network website, click the ‘Connect Wallet’ button, and select the wallet you want to use. At first, a network fee (gas fee) will be charged, so prepare a small amount of ETH or the native token of the blockchain for this.
Things to know when investing
⚠️ Important notes
1. Volatility risk: Always remember that the cryptocurrency market is much more volatile than traditional financial markets. The price of 1INCH tokens often fluctuates by 20-30% per day.
2. Smart contract risk: 1INCH Network operates based on smart contracts. No matter how much it is audited, it is impossible to completely rule out the possibility of bugs in the code.
3. Regulatory Risk: Governments may change their regulatory policies on DeFi, which may affect the operation of 1inch Network.
Advice for Smart Investment:
• Diversify: Invest only a portion of your total investment assets in DeFi.
• Continuous Learning: The DeFi ecosystem is changing rapidly, so keep learning and updating your information.
• Join the Community: Join our official channels and communities to get the latest information.
Additional Research Resources: You can check the price trend and market data of 1INCH on CoinGecko, CoinMarketCap, and check the TVL (Total Value Locked) trend of 1inch Network on DeFiPulse.
Finally, Please always invest within your means. The basic principle of DeFi investment is to only invest with money that you can afford to lose.
We learned more about 1inch network. As the DeFi ecosystem matures, the importance of infrastructure protocols like 1inch network is expected to continue to grow. The world of DeFi may seem complicated, but if you study it step by step, you will definitely be able to discover new financial possibilities. If you have any questions or want to know more, please leave a comment at any time. Let's create a DeFi community that learns and grows together! 🚀