1inch Guide: Understanding the Leading DEX Aggregator

Finding the best cryptocurrency trading rates across dozens of decentralized exchanges used to require hours of manual searching and comparison. 1inch revolutionized this process by creating an intelligent aggregator that automatically scans hundreds of liquidity sources to find optimal trading conditions in seconds. This guide explains how 1inch works, why it matters for DeFi traders, and how you can use similar optimization principles when trading on LeveX.

What is 1inch?

1inch is a decentralized exchange aggregator that fundamentally changed how traders access liquidity in decentralized finance. Rather than functioning as a traditional exchange, 1inch operates as an intelligent routing system that connects users to the best available prices across hundreds of liquidity sources and multiple blockchain networks.

The platform was founded in May 2019 by Sergej Kunz and Anton Bukov, two developers who created the initial version in just 18 hours at the ETHNewYork hackathon because they needed it for their own trading. As Bukov explained, "It was exhausting and inefficient to manually check for the best trading prices on all the DEXs before placing a trade."

Today, 1inch supports over 389 liquidity sources across 11 different blockchains, serving more than 6.7 million users worldwide. The platform has facilitated over $500 billion in trading volume, establishing itself as the leading DEX aggregator in cryptocurrency trading.

The platform's success reflects a broader trend toward optimization and efficiency in crypto trading. Just as 1inch aggregates liquidity across decentralized exchanges, LeveX focuses on providing traders with competitive fees and optimal execution through its spot trading and futures trading platforms.

How 1inch Works

1inch's core technology revolves around its sophisticated Pathfinder algorithm, which represents one of the most advanced routing systems in decentralized finance. When a user initiates a trade, Pathfinder analyzes hundreds of potential trading routes across multiple protocols and blockchain networks to identify the most efficient execution path.

The algorithm can split individual trades across up to 21 different liquidity protocols simultaneously, a process known as "trade splitting." For example, if you want to swap $10,000 worth of Ethereum for USDC, Pathfinder might determine that executing $4,000 through Uniswap, $3,500 through Curve, and $2,500 through Balancer results in better overall pricing than using any single exchange. This sophisticated routing often results in price improvements of 1-3% compared to trading on individual DEXs.

Key Pathfinder Features

• Multi-protocol splitting: Routes trades across 21+ different liquidity protocols
• Market depth optimization: Accesses various liquidity pools within single DEXs
• Collateral token integration: Incorporates Aave and Compound tokens directly into swap routes
• Gas efficiency: Optimizes transaction costs through intelligent routing

The platform's latest innovation, Fusion+ technology, launched in beta in September 2024 and represents a significant advancement in cross-chain trading capabilities. Fusion+ enables bridgeless cross-chain swaps, meaning users can trade tokens across different blockchains without manually bridging assets first. This technology has already facilitated millions in trading volume and addresses one of the biggest pain points in multi-chain DeFi trading.

Network fees for Fusion+ swaps are handled by "resolvers" rather than users directly. These resolvers must stake 1INCH tokens to qualify for this status and compete with each other to provide the best possible rates. This competitive dynamic ensures users receive optimal pricing while the resolvers earn fees for their services.

The Evolution of 1inch Technology

1inch has undergone several major upgrades since its inception, each addressing specific challenges in decentralized trading. Version 2, released in late 2020, introduced significant improvements in speed and cost efficiency while adding support for more complex trading routes involving lending protocols.

Version 3, launched in March 2021, achieved a 30% reduction in gas fees compared to its predecessor. The most recent Router v5 offers approximately 5% greater gas efficiency compared to Router v4 and 10% improvement over earlier versions. These optimizations become particularly valuable for active traders executing multiple transactions daily.

Platform Expansion

• Multi-chain support: Now covers Ethereum, BSC, Polygon, Arbitrum, Optimism, and more
• ZKsync integration: Added in February 2025 for faster, cheaper layer-2 transactions
• Fusion+ technology: Enables bridgeless cross-chain swaps launched in beta September 2024

This multi-chain approach reflects the broader evolution of DeFi toward a more interconnected ecosystem. Similarly, LeveX offers trading across multiple cryptocurrency pairs and continuously expands its supported assets to meet trader demand.

Understanding the 1INCH Token

The 1INCH token serves multiple critical functions within the 1inch ecosystem, making it more than just a simple utility token. Launched in December 2020, the token initially gained attention through a large airdrop to early users of the platform and other DeFi protocols, distributing governance power broadly across the community.

Primary Token Functions

• Governance: Token holders vote on protocol upgrades, parameter changes, and treasury allocation through the 1inch DAO
• Staking for Resolvers: Users can stake tokens to become resolvers in the Fusion+ system and earn fees
• Fee Sharing: Community can activate fee-sharing mechanisms through governance votes
• Platform Access: Provides access to certain features and potential fee discounts

The staking mechanism for 1INCH tokens creates additional utility and value accrual. Users who stake their tokens can become resolvers in the Fusion+ system, earning fees for facilitating cross-chain trades. This role requires technical expertise and capital commitment but provides a way for token holders to generate income while supporting the protocol's operations.

Token holders also benefit from the platform's fee-sharing mechanisms when they are activated through governance votes. While 1inch currently operates without charging platform fees, the governance system could implement fees that benefit token holders if the community decides such measures would support long-term sustainability.

Real-World Applications and Use Cases

1inch serves various types of cryptocurrency users, from individual retail traders to institutional investors managing large portfolios. Retail traders benefit from the platform's ability to optimize smaller trades that might otherwise be economically unviable due to high fees or poor pricing on individual DEXs.

Primary Use Cases

• Arbitrage trading: Capturing price differences across various protocols with speed and efficiency
• Large trades: Institutional investors minimize market impact through liquidity splitting
• Token access: Trading newer tokens not available on centralized exchanges
• Cross-chain trading: Moving assets between blockchains without manual bridging via Fusion+

DeFi protocols themselves integrate 1inch's APIs to provide better swap functionality to their users. Many lending platforms, yield farming protocols, and portfolio management tools incorporate 1inch's routing to ensure their users receive optimal pricing when rebalancing positions or harvesting rewards.

For traders interested in similar optimization benefits, LeveX provides competitive fee structures and efficient order execution across both spot and futures markets, helping users maximize their trading efficiency.

Recent Developments and Future Roadmap

1inch continues expanding its capabilities with several major initiatives currently in development. The platform's focus on Bitcoin and Solana integration represents one of the most significant upcoming developments, addressing the challenge of incorporating non-EVM blockchains into the DeFi ecosystem.

Bitcoin integration poses particular technical challenges because Bitcoin operates on a fundamentally different architecture than Ethereum-compatible networks. Current solutions require wrapping Bitcoin into ERC-20 tokens, which introduces additional risks and complexity. 1inch is working on solutions that would allow direct Bitcoin trading without wrapping, potentially unlocking billions of dollars in Bitcoin value for DeFi applications.

Key Development Areas

• Bitcoin integration: Direct trading without wrapping tokens
• Solana connectivity: Bridging Solana's performance with Ethereum's DeFi ecosystem
• Fusion+ expansion: Additional cross-chain capabilities beyond current offerings
• CEX integration: Potential arbitrage opportunities between centralized and decentralized exchanges

The growth of DEX aggregators reflects the broader maturation of DeFi markets. According to recent data, total trading value of DEX aggregators reached $2.03 billion as of February 2025, with the market capitalization of DEX aggregator tokens reaching $2.5 billion in January 2025. 1inch remains the dominant player in this growing market segment.

Advantages and Limitations

1inch offers several compelling advantages that have contributed to its success in the competitive DeFi landscape. The platform consistently delivers better pricing than manual trading across individual DEXs, with users typically saving 1-3% on their trades compared to using single exchanges. These savings can reach higher percentages during periods of high market volatility when price differences between exchanges become more pronounced.

Key Advantages

• Zero platform fees: Only underlying DEX fees and gas costs apply
• Perfect security record: No hacks or security breaches since 2019 launch
• Multi-chain support: Trade across 11+ blockchain networks from one interface
• Advanced routing: Sophisticated algorithms optimize every trade automatically

The platform's zero-fee model represents another significant advantage. Unlike many trading platforms that charge platform fees on top of underlying exchange costs, 1inch passes through only the fees charged by the underlying DEXs and network gas costs. This transparent fee structure ensures users keep more of their trading profits.

However, 1inch also faces certain limitations that users should understand. The platform's complexity can be overwhelming for cryptocurrency newcomers who may not understand the underlying mechanics of DEX aggregation. The user interface, while functional, requires some familiarity with DeFi concepts and wallet management.

Notable Limitations

• Complexity for beginners: Requires understanding of DeFi and wallet management
• Gas cost sensitivity: High Ethereum fees can negate savings on smaller trades
• Market dependency: Cannot provide better pricing than what's available in underlying markets
• Cross-chain complexity: Additional risks and complexity compared to single-chain trading

Gas costs on Ethereum can still be prohibitive for smaller trades, despite 1inch's optimization efforts. During periods of network congestion, gas fees may exceed the value saved through better routing, making the platform less attractive for smaller transactions.

For traders seeking similar optimization benefits with a more straightforward interface, LeveX provides competitive fee structures starting as low as 0.0060% and efficient execution across both spot and futures markets.

Comparing 1inch to Other Solutions

The DEX aggregator space has become increasingly competitive, with several platforms offering similar services but with different focuses and capabilities. ParaSwap represents 1inch's closest competitor, focusing primarily on Ethereum-based trading with advanced features like limit orders. However, ParaSwap's cross-chain capabilities remain limited compared to 1inch's Fusion+ technology.

Jupiter has emerged as the leading DEX aggregator on Solana, providing similar routing optimization for the Solana ecosystem. While Jupiter excels within Solana's high-speed environment, it doesn't offer the cross-chain capabilities that make 1inch attractive for multi-chain traders.

Platform Comparison

• 1inch: 389+ sources, 11 chains, advanced cross-chain via Fusion+
• ParaSwap: Ethereum-focused, developing cross-chain features
• Jupiter: Solana specialist, excellent single-chain optimization
• Traditional CEXs: Better liquidity for major pairs, require custody surrender

LeveX bridges this gap by providing professional trading features with a user-friendly interface, combining efficient execution with competitive fees and comprehensive educational resources. The platform's community features also provide support and learning opportunities that pure DEX aggregators cannot match.

Getting Started with DEX Aggregation Concepts

Understanding how DEX aggregators like 1inch work can improve your overall cryptocurrency trading knowledge, even if you primarily trade on centralized platforms. The core principles of routing optimization, slippage minimization, and liquidity aggregation apply across various trading environments.

Price impact awareness becomes crucial when executing larger trades. Just as 1inch splits trades across multiple DEXs to minimize market impact, traders on any platform should consider how their order size might affect execution prices. Breaking large orders into smaller pieces or using limit orders can help achieve better average prices.

Key Trading Concepts from DEX Aggregation

• Liquidity timing: Trade during peak hours when spreads are tighter
• Cost optimization: Consider transaction costs in all trading decisions
• Multi-venue thinking: Compare prices across different platforms
• Cross-chain opportunities: Understand arbitrage between different networks

For traders interested in applying these optimization principles, LeveX provides detailed educational resources covering topics from basic trading concepts to advanced order types that can help improve trading efficiency.

The success of platforms like 1inch demonstrates the value of intelligent routing and optimization in cryptocurrency trading. Whether you choose to experiment with DEX aggregators like 1inch or prefer the comprehensive features available on LeveX, understanding these concepts can improve your trading results.

Ready to explore optimized cryptocurrency trading? For more insights about cryptocurrency concepts, explore our Crypto in a Minute series for straightforward explanations of complex topics.