1inch Network (1INCH)

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Revision as of 07:10, 12 December 2022 by Grand Master Pepe (talk | contribs) (→‎Cons)

From this blog (3-4-2020):

"1inch is a decentralized exchange aggregator. This means that when you go to swap one token for another on the platform, 1inch looks at a host of DEX’s (decentralized exchanges) and sends your order to the one that provides the best price. Check out Colin Platt’s review on Decrypt."

Basics

 History

"Launched by software engineers from Porsche and NEAR Protocol. The platform was launched at the ETHGlobal hackathon last year as a liquidity aggregator connecting multiple decentralized exchanges (DEXs)."

Audits & Exploits

"1inch is quite clear on how their code gets their users going (to swap), and this is done so with clear architecture docs as well as relevant information pertaining as to contract ownership. It uses chainlink. While users should be aware of slippage issues, front-run mitigation tactics are also implemented. we'd really like to see a bug bounty implemented. This is curious given they used to have one but it has since been deactivated. We'd also like to see a little more robust documentation relating to their testing methodologies - at the moment they don't provide scripts for users to replicate their tests."

  • Upgraded and scored 85% (22-9-2021):

"There have been multiple audits performed on the 1inch contracts before and after their various deployments (v1-v3). The full list of audits can be found here."

With the comment: "1inch has been updated to an 85%! this is an impressive improvement from our last review on @1inch. Impressive team transparency, documentation, testing and access controls."

  • There is evidence of a 1inch bug bounty program, but no details regarding the potential rewards offered to participating users (22-9-2021).
  • Previously, 1inch scored a 31% (28-1-2021); "There have been 8 audits preformed on 1inch exchange. However, there are no published contract addresses, and therefore verification of the validity of any of these audits becomes impossible. This therefore makes the score 0%" with the comment: "No smart contract addresses. This means their 8 audits count for nothing.  It is not difficult. Virtually no testing either, but good docs."

Bugs/Exploits

Governance

"The community will determine protocol fees and the distribution of rewards. There will be two types of governance: pool governance and factory governance.

Pool governance will include the configuration of parameters that are specific to each pool, such as the swap fee, the price impact fee and the decay period.

Factory governance is responsible for parameters shared by all pools, such as the default swap fee, the default price impact fee, the default decay period, the referral reward and the governance reward."

"In addition to voting on general governance proposals, 1INCH holders can exercise Instant Governance by voting directly and continuously on key protocol parameters. For example, 1INCH holders can vote on the distribution of Spread Surplus (i.e. positive slippage) collected by the 1inch Aggregator and Liquidity Protocol. The voting periods are permanently open, meaning a user can stake their token and vote on a parameter to x value one day, and change their vote to y value if their changes based on new information."

Admin Keys

"1inch admin access control information can easily be found at the bottom of the governance section of their website. The contracts are immutable. No Pause Guardian or similar function was found in the 1inch documentation. However the contracts have pause capability."

DAO

  • From their blog (13-4-2021):

"During the first phase, the 1inch Foundation distributes the 1INCH tokens to community members through incentivization activities in accordance with a lockup release schedule. The goal of this phase is to build a core community that will implement DAO-based governance in an efficient way.

At this stage, instant governance is available, which is a feature that enables 1INCH token stakers to conveniently participate in, benefit from, and vote for various protocol settings, avoiding lengthy voting periods.

At the second phase, scheduled to start in early 2022, the 1inch Foundation will introduce a full-fledged DAO functionality, providing 1INCH stakers with access to extended governance mechanisms in a bid to completely decentralize the 1inch network that will eventually be owned by the community.

“We are deliberately waiting for about a year before introducing the second phase of DAO governance,” says Sergej Kunz, 1inch Network co-founder. “If we had done it earlier, the DAO would be controlled by a narrow group of individuals. But our aim is true decentralization and we want governance to be totally inclusive.”"

Treasury

"Currently, 100% of the Swap Surplus is split between the 1inch Network DAO Treasury (~80%) and Referrers (~20%). However, the vast majority of trading volume is not through referrals; therefore, most of the Swap Surplus goes directly to the Treasury.

Despite Q3 having nearly half the trading volume of Q2, the 1inch DAO Treasury grew its balance by 7% to $15.7 million in Q3. The implementation of 1IP-08, a diversification mechanism for the Treasury, authorized the conversion of Swap Surplus into DAI, USDT, WETH, and WBTC. A total of 84 WETH was added to the treasury, valued at approximately $112,000 at quarter end.

After the execution of 1IP-09, the Treasury switched from buying USDC with Swap Surplus revenue to buying the 1INCH token when prices fall below $1.30. When the cost of 1INCH is greater than or equal to $1.70, the Treasury reverts to using Swap Surplus to buy USDC. The 1inch DAO Treasury has since accumulated $204,000 in 1INCH or 350,000 tokens in native terms."

  • From a commissioned Messari report (21-7-2022):

"The 1inch Network generated $6.7 million in protocol revenue in Q2, virtually doubling  the prior quarter revenue of $3.3 million. Approximately 42% of total protocol revenue in the quarter was generated on May 11th and 12th, coinciding with the collapse of UST. Additionally, during the stETH depeg on June 13, protocol revenue grew 14x more than the 7-day average representing 4% of quarterly revenue. The market inefficiencies caused by UST and stETH holders scrambling to exit their positions were likely the cause of an excess in “swap surplus”, and ultimately the spike in protocol revenue. This increased the 1inch DAO treasury balance by 85% from $8 million in Q1 to $14.5 million. Consistent with the overall volume, Ethereum represented $5.5 million, or 87% of total protocol revenue, followed by BNB chain and Polygon. The BNB chain and Polygon accounted for $378 million and $340 million, respectively. In Q2, Optimism contributed protocol revenue for the first time, accounting for less than 2%, or $107,000."

Token

Launch

"1inch is facing backlash from the community regarding its 1INCH token distribution.

Liquidity providers to 1inch’s new automated market maker DEX Mooniswap will earn one-year locked tokens for adding liquidity to any of these pairs before the token launch. The token’s launch date hasn’t been set yet."

Token allocation

  • From their blog (21-8-2020):

"A max vesting time of 1INCH distribution is four years. Over the course of this time, the distribution mechanism will be the following:

  1. 30% for security of the network and maintenance of its functionality with 4 year vesting;
  2. 22.5% for the 1inch core team and future employees with 4 year vesting;
  3. 21% for ecosystem growth (yield farming, community building, research, etc.) with 4 year vesting;
  4. 19.5% to investors and shareholders with 2,5 year vesting;
  5. 5% to advisors with 4 year vesting;
  6. 2% to early Mooniswap liquidity providers with 1 year vesting."
  • From The Defiant (24-8-2020):

"Detailed in the announcement post, 1INCH will distribute 2% of tokens to early Mooniswap liquidity providers and 21% to ecosystem growth. This is just 0.5% more than the core team (22.5%) and 3% more than investors (19.5%)."

Utility

  • From their blog (21-8-2020):

"The 1INCH token is a utility token that serves several network needs:

  1. to ensure a permissionless fashion of interaction with the protocols;
  2. to secure funds for further ecosystem development;
  3. to incentivize participation in potential governance of specific network functionalities;
  4. to stake for the network security."
  • From The Defiant (24-8-2020):

"Touting itself as “the system (which) will mark the most efficient and benevolent structure to ever hit the market”  the 1inch team is scrambling to emphasize 1INCH is much more than just a worthless governance token, hence the conservative distribution. Still, they haven’t clarified exactly what the token’s utility will be other than saying “it is gonna be huge.”"

"The key feature of the 1inch Liquidity Protocol version 2 is the price impact fee. This is a fee that grows with price slippage to ensure that liquidity providers and 1INCH token stakers earn significantly more on volatility.

Users who stake their 1INCH tokens, as well as liquidity providers in the 1inch Liquidity Protocol can vote directly on major protocol parameters: the price impact fee, the swap fee, the governance reward, the referral reward, and the decay period."

Token Details

Stablecoin

one1Inch

"The ICHI Community has launched one1INCH, a stablecoin for the 1inch community. one1INCH will provide a stablecoin for the community that can be used to create USD exposure during 1inch operations, help diversify the 1INCH at 1inch Foundation treasury that is the part of 1inch Network DAO, more easily pay operating costs, provide liquidity, and earn rewards."

Tech

  • Whitepaper can be found [insert here].
  • Code can be viewed [insert here].

Implementations

How it works

"1inch is similar to the 0x API in its overall aim of bridging multiple DEX venues but uses a combination of centralised off-chain order book swaps and on-chain swaps that is facilitated by OneSplit."

"1inch’s Aggregation Protocol (AP) allows users to route trades across various markets and realize the best available rate compared to any individual decentralized exchange (DEX). In late 2020, the 1inch Liquidity Protocol introduced a native automated market maker (AMM) to the network which enables users to provide liquidity and earn passive liquidity mining rewards. The network’s third product, the 1inch Limit Order Protocol (LOP) was introduced in June 2021 to support conditional limit and stop-loss orders with no fees. All three protocols are governed by the 1inch DAO using the network’s native 1INCH token."

Fees

Upgrades

"1inch has introduced its v2, which contains a new discovery and routing algorithm to execute swaps faster and at better rates. The team also improved the user interface design."

"1inch v3 Introduced. V3 includes a bunch of improvements such as lower transaction fees, more liquidity and other features."

Staking

Liquidity Mining

Scaling

Interoperability

Other Details

  • The aggregator uses GasToken to potentially lower transaction fees for users when network congestion is high.

Oracle Method

Compliance

  • 1inch blocks out US trades in preparation for separate American platform (30-9-2021).

Their Other Projects

1inch Aggregation Protocol

"The protocol facilitates cost-efficient and secure atomic transactions by utilizing a wide range of protocols and performing argument validation and execution verification."

1inch DAO

"1inch DAO is a decentralized autonomous organization that enables $1INCH stakers to vote for key protocol parameters and take part in the network's governance."

1inch Foundation

"The 1inch Foundation is a non-profit organization that issued the $1INCH token and is dedicated to fostering the 1inch Network and initiatives that benefit the network's community."

1inch Labs

"A key contributor to the 1inch Network and a decentralized group of software builders that develop a range of open-source protocols governed by users through the 1inch DAO."

1inch Liquidity Protocol

  • 1inch launched its own automated market maker (AMM) called Mooniswap (11-8-2020).

"1inch.exchange, is integrating with Tron's JustSwap. The new partnership will also see 1inch.exchange’s Mooniswap merge with Tron's blockchain."

"It is unique in its design through its addition of a decay period and price impact fee. These features aim to increase profits for liquidity providers (LPs) and lower profits for arbitrageurs while maintaining the ease of use traders expect from an AMM."

Roadmap

  • Can be found [Insert link here].

Usage

"1inch implementations on Layer-2 scaling solutions Arbitrum and Optimism grew in every key metric while outperforming every other chain.

User behavior shifted as the Limit Order Protocol took market share from the Aggregation Protocol, negatively impacting the treasury."

  • From a commissioned Messari report (21-7-2022):

"Ethereum represented 89% of total volume traded on 1inch in the quarter. Polygon accounted for 52% of total transactions across the Aggregation and Limit Order Protocols. Layer 2 scaling solutions led growth across total transactions and users. USDC was the most actively traded asset with over $19 billion in volume."

"Over 50% of total distribution to 1inch for the 15th and 16th June stemmed from Curve. Additionally, nearly 60% of the total trade volume were USDC and USDT on both days."

"Activity on DEX aggregator 1inch continues to grow in recent weeks facilitating $207 million in trading volume in the last 3 months."

Projects that use or built on it

"1inch.exchange, is integrating with Tron's JustSwap. The new partnership will also see 1inch.exchange’s Mooniswap merge with Tron's blockchain."

  • Gravity is integrating with 1inch (8-2020).

Pros and Cons

Pros

Cons

  • Had investment from bankrupt Alameda Research/FTX, which came out (11-11-2022) during the FTX crash. This could mean fall-out risk. The investment turned out to be $10.2M worth of tokens (8-12-2022) during 2 sells.

Competition

Team, Funding, Partners

Team

Funding

"1inch has raised $2.8 million in a funding round  led by Binance Labs. Investors in its funding round, announced Tuesday, also included Galaxy Digital, Greenfield One, Libertus Capital, Dragonfly Capital, FTX, IOSG, LAUNCHub Ventures and Divergence Ventures. Loi Luu, founder of Kyber Network, and Illia Polosukhin, co-founder of NEAR Protocol, also participated."

"1inch has secured a $12 million funding round. The funding round was led by Pantera Capital."

"The raise also saw the participation of about 50 other investors, including Jane Street, VanEck, Fenbushi Capital, Alameda Research, Celsius, Nexo, Tribe Capital, and Gemini Frontier Fund, among others."

Partners 

"1inch partners with BitPay: Thanks to the partnership, BitPay users will get access to the 1inch dApp’s DEX aggregation functionality for the best deals across multiple liquidity sources."

 (:

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