What is 1inch Network? How Does It Work
1inch is an exchange aggregator that compares all cryptocurrency exchange platforms on the internet to find the best rates for you. It helps traders save time to compare every platform, making the trading process easier and less time-consuming.
1inch is also the utility and governance token that governs the platform. This token can be used to exchange coin pairs, which can be found at https://alligat0r.com/coin-pairs/1inch/avax/info. Exchanges play a very important role in the crypto world. They act as a secondary market for allowing the transfer of coins between two parties. The cryptocurrency exchange ecosystem is of two kinds: decentralised and centralised.
What are exchanges?
A slight knowledge of exchanges is necessary to understand how 1inch works and its utility.
The centralised crypto exchanges are controlled and governed by entities. They hold your cryptos to execute a contract until it can match a buyer and a seller. But a decentralised crypto exchange platform executes smart contracts that automatically is executed once buyers and sellers are matched. There is no third party interference, and the coins are also not kept in custody to be used at liberty.
The Centralised exchange platforms act much like real life securities exchange platforms acting as a custodian. It does have the advantage of assuming responsibility if some foul play occurs like a hack. But in other cases, your coins can be guarded by third parties and withheld without any plausible explanation. This is the reason many prefer Decentralised exchange platforms.
What is the role of 1inch?
Decentralised exchange platforms have an integral problem of liquidity known as slippage. This happens when the expected price of a trade does not match the actual price the trade takes place at. The difference creates chaos since assets are bought for more than expected or sold for less due to a lack of trading volume. The 1inch DEX protocol is created to combat the order slippage.
It can be understood with an example. For example, a whale wants to buy 1000BTC from the open market at $50,000. But only 500BTC is available in the open market. So, due to the order, the exchange cannot fulfil it and moves to $50,500 for the next sell order. So, the whale ends up paying $250,000 more for the same amount of Bitcoins he had intended to pay at the first instance. The 1inch is created to help avoid this situation of slippage by merging the trading activity across various exchange platforms. This way, the entire product liquidity can also be merged, and slippage can be reduced.
Is 1inch helpful?
Traders have always preferred Decentralised exchange platforms. This has always helped them avoid handing over control of funds to another third party, or allow custody of funds or providing fees for doing so. 1inch is one of the first DEX aggregators launched in December 2020. 1inch also introduced its V2 in December of 2021 and hit an all-time high in 2021. Surpassing the V2 event, 1inch crossed 1 million users.
So, it can be safely assumed that 1inch is a good investment for the future and a good platform to use for exchange. If you are looking for another exchange aggregator that can give you information on all kinds of exchanges, Alligat0r.com is one of the best platforms for it.