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Read the latest online DEX aggregator 1inch V2

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1inch not only allows you to quickly find the best exchange rate for your token money, but also improves the most effective exchange path. The new 1inch V2 introduced CHI tokens and made significant improvements in many ways.

Original title: "Reading the latest DEX Aggregator 1Inch V2"

Source: Chain smell

In 2020, the decentralized Exchange (DEX) brought a lot of liquidity to many early scrip projects, introducing a more groundbreaking "liquidity mining" concept where DeFi users only need to provide liquidity to reap the benefits. There are now several decentralised exchanges in the industry, and decentralised exchanges make sense for aggregators [prime brokers] because they facilitate trading and provide best trade execution across different pools of liquidity. Since DEX liquidity "fragmentation" issues are unlikely to disappear anytime soon, platforms like 1Inch could easily become the first choice for most DeFi trading users.

Traditional trading aggregator/prime brokerage services

In traditional financial markets, only investment Banks and large financial institutions can offer trading aggregators/prime brokers to help hedge funds or other Banks promote active trading operations. As a middleman, a transaction aggregation/prime brokerage service provider can provide a number of support and services to clients, such as:

- Management of risks;

- Capital accumulation;

-Coordinate security transactions;

- Act as "middlemen" between hedge funds and institutional investors and commercial bank counterparties.

Trading aggregation/prime brokerage services enable the smooth running of large trading operations, thus linking institutional traders closely with global markets and investors.

Digital asset trading aggregator/prime brokerage business

Cryptocurrency traders have the same liquidity, security and regulatory needs as institutional counterparties. However, the existing technical and financial infrastructure to support an encrypted ecosystem remains underdeveloped and disconnected from the market. Despite the number of cryptocurrency exchanges, there are still significant limitations in terms of connectivity, network security, and cross-platform efficiency. With the cumulative market value of cryptocurrencies approaching $250bn in 2019 and the growing influence and size of the cryptocurrency ecosystem, demand for cryptocurrency prime brokerage services has become increasingly urgent. In fact, a number of transaction aggregation/brokerage services have emerged in the cryptography market, and their main solutions include:

- Provide support for trading activities;

- Provide support for arbitrage opportunities;

- Provide support for multi-platform navigation services for the transaction ecosystem.

What is a decentralized exchange?

A decentralized exchange (DEX) is a cryptocurrency exchange that can operate without the involvement of a central authority or a third party. Based on the Ethereum blockchain, decentralised exchanges provide users with greater security and effective control over the money they store or trade. In contrast, centralized exchanges do not rely entirely on blockchain. Instead, they rely on third-party operators, who also charge transaction fees.

What challenges do traditional decentralized exchanges face?

- Inefficiency: Users have to manually view all traditional decentralized transactions so they know the best price and the most efficient price before they can choose a decentralized exchange to exchange;

- It is difficult to find the best exchange rate for tokens in traditional decentralized exchanges, and manual checks cannot cope with complex trading routes and paths;

- It is a time-consuming process to compare the exchange rates of all traditional decentralized exchanges, which fluctuate.

The DEX Aggregator is a relatively new product that allows users to find the best token exchange rate in the shortest time, rather than being limited to any single exchange. If the DEX aggregator algorithm is advanced enough, it can also allow users to complete the optimal transaction at the best price in real time, while avoiding the loss caused by the price influence and reducing the risk of transaction failure.

What is a 1inch?

Launched in May 2019, 1Inch is a DeFi converged service platform that aggregates liquidity from multiple other decentralized exchanges to provide the best potential exchange rates for traders making token conversions. The 1Inch effectively ACTS as a unified portal to the decentralized exchange ecosystem, bringing together different sources of liquidity and giving traders the ability to trade efficiently across different DeFi platforms.

On the other hand, 1Inch is also an unmanaged exchange. Instead of holding users' digital assets directly, they help them make peer-to-peer trades and then charge a small fee for each trade. The 1inch "splits" the tokens the user wants to redeem into multiple parts, then distributes them across multiple "market depths," each part being redeemed on different decentralized exchanges. At present, 1Inch Exchange obtains liquidity from 21 mainstream DeFi protocols, including 0X Protocol, Uniswap, Bancor, Balancer, Kyber, Airswap, etc.

Chi Gas Token

In May 2020, 1Inch announced the launch of native functional gas tokens: Chi. During the transaction, 1Inch would destroy gas tokens to reduce the cost -- in fact, 1Inch's Chi Gas Token can reduce the cost of gas by 42%. By using Chi Gas Token in transactions, users can effectively save miners' expenses and costs, and then bid for higher prices without paying corresponding high Gas fees. So far, 1Inch has destroyed nearly 6 million gas tokens, saving users more than $2 million in gas fees.

To transfer value over Ethereum, users have to pay a gas fee (GWEI), similar to what Banks charge for money transfers. As a basic resource, gas fees are included in every Ethereum online transaction, and the mining rewards paid to miners by the Ethereum blockchain are proportional to the gas fees consumed in the transaction. However, due to the volatility of gas charges themselves, it is almost impossible to accurately predict the final scale of transaction costs -- which is the main reason why 1inch created the Chi Gas Token, namely: to solve the problem of high volatility of gas charges. By coinage gas fees, users can store gas when the cost is low and use/deploy gas when the cost is high.

1inch v2

1Inch released the second version of its agreement in November 2020, which aims to improve the original agreement to ensure users can process transactions at the best exchange rate and the fastest speed. The main component of the 1inch V2 version is Pathfinder, which is an application program interface (API) that includes:

A new exploration and routing algorithm; A more intuitive, customizable, and user-friendly UI.

In addition to being able to "unforge" a token exchange deal among the various liquidity agreements, the new Pathfinder algorithm made efficient use of the deal's numerous depths, the market forge, a key indicator of the supply and demand for cryptocurrencies in terms of the number of open buy and sell orders.

Pathfinder can split an exchange for a particular protocol according to different "market depths", acting as a bridge between the "Source token" and the "Destination token". At this stage, 1inch V2 supports finding the best exchange rate from 21 different DeFi liquidity sources and can significantly reduce response times to help users process transactions more efficiently. For example, the exchange rate of 1 SBTC-SUSD offered at 1inch is nearly 98 per cent higher than that offered on Uniswap.

Pathfinder exchange path:

一文读懂最新上线的 DEX 聚合器 1inch v2

The 1Inch V2 platform allows you to perform multi-path conversion transactions. As part of the conversion path, the 1Inch V2 also supports "packing," "unpacking," and "migrating" from Aave and Compound mortgage tokens.

The following image shows the Pathfinder user interface:

一文读懂最新上线的 DEX 聚合器 1inch v2

Why is 1inch so attractive?

1Inch Exchange offers users an innovative DeFi trading experience that allows them to handle large trades at the best exchange rate. In the past, users had to manually search many DEX listings to find the best exchange rate, which was difficult and time-consuming, but 1Inch provides an automated and interoperable platform to quickly find the best exchange rate for a token and improve the most efficient exchange path.

Not only that, the new 1inch V2 introduced CHI tokens and made significant improvements in a number of areas, including:

- To bring customizable and competitively priced transactions to users;

- Converged liquidity;

- Raise lower gas charges;

- Reduces user costs in the colleague, further simplifies the important transaction function.

The 1Inch solution comes at a time when DEX's trading volume has been exploding. In fact, DEX's market growth over that period has been significantly better than CEX's. According to CoinGecko, in the third quarter of 2020, the average monthly trading volume of the top 10 decentralized exchanges grew 197%, while the average monthly trading volume of the top 10 centralized exchanges grew only 35%. Of course, centralised exchanges still account for a large proportion of total market turnover, but DEX has been accelerating its "grab" of market share -- from an impressive $3.8bn in July to an impressive $30bn in September. Uniswap continues to dominate the DEX market, accounting for 47% of its trading volume in July, but by September it had soared to 63%, eclipsing it at one point. Coinbase. In addition, between July and September, the total value of transactions on centralised exchanges and decentralised exchanges rose by $155bn, or 88%.

一文读懂最新上线的 DEX 聚合器 1inch v2

Source: CoinGecko

1Inch, which is expected to gain 70% of the DEX market by the end of 2021, has strong growth prospects as the DeFi community's most popular aggregator for traders recently also exceeded $6 billion in total turnover and more than 350,000 token conversions.