1inch has launched the Aqua shared liquidity protocol, enabling a single pool of funds to support multiple DeFi liquidity positions
BlockBeats News, July 28th — According to official sources, the decentralized exchange aggregator 1inch has officially launched the Aqua shared liquidity protocol for all users. Aqua allows users to support multiple liquidity positions with just one token balance without depositing assets into a liquidity pool. The assets always remain in the user's wallet, and only when the transaction is successfully executed, the protocol settles by calling the respective token from the wallet through a single atomic transaction, returning the received tokens and fees to the wallet. 1inch stated that this new model, known as "shared liquidity," is expected to address issues in current DeFi such as long-term idle liquidity, low capital efficiency, and asset custody risks. The protocol was opened to developers last November and is now officially launched to all users, supporting 13 EVM-compatible chains, including Ethereum, Arbitrum, Avalanche, Ronin, BNB Chain, among others.
1inch stated that the current DeFi liquidity faces multiple structural issues. Many protocols have a high Total Value Locked (TVL); however, a significant amount of liquidity remains inactive in non-active price ranges, unable to benefit from transaction fee revenues and exposed to market volatility risks. Additionally, liquidity providers (LPs) often need to divide limited funds among different protocols, trading pairs, and price ranges, leading to reduced capital efficiency. Moreover, the traditional model requires users to deposit assets into a liquidity pool, which not only restricts the use of assets for other purposes but also means relinquishing asset custody and facing risks such as Just-In-Time (JIT) bot frontrunning for fees.
Aqua allows the wallet balance to be registered as a shareable liquidity source, enabling the same asset to support multiple liquidity positions simultaneously, increasing fund efficiency without transferring asset ownership. When the wallet balance is insufficient to cover a transaction, the protocol does not execute the transaction, ensuring that the user's actual risk is always limited by the wallet's holdings.
