Decentralized exchanges are one of the offerings of the cryptocurrency market. Like a traditional centralized exchange, decentralized exchanges match buy orders with sell orders and facilitate buyers and sellers. However, the employ a non-custodial mechanism and run through self-executing programs called smart contracts. 1inch is an integral cog in the decentralized ecosystem. It is a DEX aggregation which means it scans various decentralized exchanges to find the best offering price in the market for users.
What is 1inch?
1inch is an interesting proposition and it solves some of the issues that decentralized exchanges face. As no technology is perfect, the con of DEXs is that they often times suffer from lack of liquidity because of the non-custodial mechanism. Decentralized exchanges utilize the automated market maker technology (AMM) whereby the DEX runs automatically through smart contracts which, in turn, dictate the terms and conditions of liquidity pools. Since all of this takes place on chain, transactions are subject to variable gas fees. In times of network congestion, higher gas fees can discourage liquidity providers and thus the exchange will suffer from liquidity.
The platform of 1inch aggregates liquidity across various decentralized exchanges to deepen DEX liquidity. This also ensures that slippage is eliminated which happens when a digital asset is sold for less than the expected price or bought at a higher price.
The blockchain technology is fueling the shift towards decentralization and decentralized exchanges offer an interesting alternative to traditional ones. The problem of liquidity had been rampant with DEXs but with 1inch’s technology, the problem can be solved. This makes 1inch an interesting proposition in the market.
Future outlook
1inch combines the power of Ethereum, Polygon and Binance Smart Chain with the aim of boosting the decentralized finance sector. The development team of 1inch is highly active and has recently incorporated Oasis which will help users avail cheaper rates for DAI on the platform. Moreover, it has grown at a phenomenal pace. The network has reached a new milestone by surpassing $75 billion in daily trading volume on Ethereum’s network.
The interesting offering of 1inch coupled with its current growth trajectory indicates towards a bright future for the cryptocurrency. The future outlook for 1inch is bullish as per various estimates. Digital Coin Price predicts the cryptocurrency will end the year at a price level of $5.28 and reach towards $12.15 by 2026. At the time of writing, the cryptocurrency stands at a price level of $3.29. The price has been, moving uphill in the weekly timeframe with a daily increase of 5%.
