@k06aa ready? Welcome to Crypto AMA!
Could you start off by giving us a brief bio on your background as
well as how you got started in crypto? And then a short overview of
1inch and a brief update on your progress to date? We’ll then be off
to the races with questions.
Hi, I am definitely ready! I am 1inch co-founder and CTO, came to
blockchain development 3-4 year ago, worked for Near on Rainbow Bridge
and for some other projects. Short overview of 1inch is: aggregator
which combined Ethereum DEXes into single huge DEX with enourmous
Recenty 1inch crossed $5b in total volume, with 30k users who did 300k
We build very first version of 1inch on the ETHNewYork hackathon
within 48 hours. If was just splitting volume among Uniswap, Bancor,
Kyber. RN we have much more advanced algo, which involves analysis of
hundreds different DEXes, since very liquidity pool is a separate DEX.
So 1inch is ultimate DEX and DeFi aggregator and some additional
protocols like Mooniswap AMM – highly profittable liquidity protocol,
who prevents arb traders from earning most of the profits 😁
Gotcha. So let's dig into that a little more. Can you ELI5 how
that analysis of hundreds of DEXs works?
The more you swap on each DEX the worse is the exchange rate. So we
are trying to distribute user fund among different DEXes in a smart
way. We analyze each piece of the liquidity also taking gas fees into
account and build multi-path route to have a minimal slippage.
Example of multi-path route, from one of my slides 👌
how do limit orders on 1inch compare to others like matcha or 0x mesh?
Does 1inch act as the otherside of all limit orders placed through?
We invented the DEX aggregation and gonna continue innovate to have
the same unreachable results. Now we see some competitors have tech we
already had almost 1 year ago. And one of the most promising
competitors of 1inch is Totle TBH
Can you give us some examples?
"competitors have tech we already had almost 1 year ago"
My general thoughts from reading this market is that participants are
not aware of everything that goes into 1inch tech, or any aggregators
for that matter.
It is really hard to compare aggregators transactions, since Ethereum
nodes can only estimate GAS_LIMIT of the transaction, but not a
GAS_USED. Which actually can be different for dozens of percents.
Especially after the Istanbul Ethereum hardfork. But 1inch is
carefully taking gas fees into account. Sometimes it is better to
spend $10 more on the fees to get $15 more result for example
ELI5: Imagine you have token A with high liquidity to ETH and token B
with high liquidity to DAI, swapping A to B with splitting will never
give you great result same as route: A -> ETH -> DAI -> B,
plus with splitting on each step 🙂
ELI5: on-chain liquidity could be discovered from smart contract,
off-chain liquidity could be discovered only with external software.
Both liquidity could be then accessed via smart contract, the
difference is only in discovering. Since our algo works off-chain it
aggregate among both on-chain and off-chain liquidity.
Who is providing off-chain liquidity today? And if off-chain liquidity
is discovered with a better price than on-chain liquidity, what
I believe AirSwap and 0x are providing off-chain liquidity, but for
aggregator it makes no sense is liquidity on-chain or off-chain.
Off-chain protocol allows market makers to wokr more efficiently than
on on-chain, because on-chain require pay gas for each interaction.
I hope this would help, because gas fees are rn higher than it could
be because of wallets gas estimation implementation.
EIP-1559 proposes implicit gas prices for transactions instead of
explicit. Simply: you will select you wanna cheap of fast transaction
and the fair gas price will be determined by deterministic algo on the
How do mempool shenanigans (e.g. front running) affect 1inch today?
How do you see them affecting 1inch in the future?
We found out that arb traders earns on uniswap much more than LPs and
we decided to fix this. Arb opportunity opens gradually and arb
traders earn a bit, but most of the profits from trading slippages are
accumulated by LPs.
We fight with FR by setting low max-price-impact/max-possible-slippage
allowed. There is a trade off, the less is allowed - the higher risk
of failed transaction. The more is allowed - the higher risk to be
Sure, it was really cool idea. Simply: on uniswap when someone swap it
changes prices on pool and immediatelly improve price in opposite
direction. If you swapped $1k and lost $20 on the slippage, fastest
arb trader will bet this $20 profit. We decided not to improve priced
in opposite direction immediatelly, but to impre prices gradually.
High competition between arb traders do not allow them to wait until
high profit and they earn a bit by rebalancing pool and keeping most
of the slippage inside the pool for the LPs.
We do not like to call it a competition because we are all growing and
trying to capture CEX users to decentralize space. It seems Totle is
one of the most experienced aggregators with integrations and
traction. It seems they were the first who started aggregation in
early 2018, but we somehow were not aware of them when we started.
The more people use aggregators – the more fair volumes distribution
will market have. This would allow AMMs and other liquidity protocols
to compete on a next level. We see the more value and power people get
from 1inch the more they spread about 1inch. We estimated Mooniswap LP
roi is much higher than other AMMs but when competitors get 10x more
volume (not fair relatively to their liquidity and prices) – their roi
is doing great for no tech/math reason.
Rn we see Uniswap have 30k users/wallets daily (5k new users/wallets
every day). This is far far bigger any other DEX have. But market is
always aiming to efficiency, their users will aware of other DEXes and
^^ Some insights on "DEX users/wallets" and "New