A deep dive into 1inch Fusion

1inch Fusion, with its intent-based architecture, has set a new standard in DeFi. Projects can offer their users efficient swaps and access to liquidity across the market by integrating the 1inch Fusion API.

1inch Fusion has been a game-changer in token swapping since its launch in December 2022, allowing users to exchange tokens without paying gas fees. From the beginning, 1inch Fusion offered user access to liquidity from the entire crypto market and built-in MEV protection. This was a significant step towards making swaps more affordable and efficient. In May 2024, 1inch Fusion received a substantial upgrade, further enhancing the swapping experience.

Key benefits of 1inch Fusion

• Swapping without gas fees. Users don't need to hold networks’ native tokens to make swaps and don't pay gas fees.
• Better prices on token swaps. Users can save roughly 9.5% compared to competitors' offerings.
• MEV protection. MEV bots remain a significant threat especially for large transactions. However, 1inch Fusion is designed to eliminate the risk of frontrunning and sandwich attacks
• Unlimited liquidity. Liquidity is sourced from the entire crypto market, including CEXes, ensuring sufficient resources for every token. 
• Lightning-fast swap executions. Users experience almost instant swap executions.
• Low price impact. The partial fill feature minimizes price impact.
• Low probability of order expiration. The risk of order expiration due to gas price fluctuations is almost eliminated.

How 1inch Fusion works: intents and smart execution

1inch Fusion leverages an intent-based architecture, a cutting-edge approach in DeFi that focuses on users' goals. This involves users setting intents and market professionals executing them through multi-step operations based on specific criteria. Realized in 1inch Fusion, this approach has set a new standard for efficient token swaps in DeFi.

Fusion is built on the power of 1inch's Aggregation and Limit Order protocols. Just like limit orders, Fusion swaps are executed according to presets established by users, setting rate and duration limits. Orders are filled by resolvers—professional market makers who undergo thorough verification and pay the associated gas fees, freeing users from this burden.

Under the Dutch auction model, Fusion swaps' filling rates decrease over time, influenced by swap volume and selected presets. A smooth rate curve ensures better order fill rates, with rapid transactions possible thanks to the price curve adjusting instantly based on market gas prices. Fusion orders are divided into parts, allowing resolvers to fill them partially, minimizing price impact even for large-volume swaps.

Users can also decide how quickly their orders are executed, offering more flexibility and efficiency compared to regular swaps or limit orders. Resolvers bridge liquidity from multiple sources, including the 1inch Aggregation Protocol, AMMs, PMMs, centralized exchanges and their own sources, ensuring sufficient liquidity for swaps.

Fusion swaps are executed directly by resolvers who combine them with other transactions in a bundle for block inclusion, thus protecting them against MEV bot attacks.

Thanks to its intent-based architecture, 1inch Fusion elevates swaps by offering streamlined, user-centric execution along with no gas fees, optimal token rates, market-wide liquidity bridging, MEV protection and more, providing a seamless and efficient DeFi experience.

A step-by-step guide to Fusion swaps

Fusion swaps are straightforward and user-friendly, allowing users to complete transactions in just a few clicks.

1. Enter swap amounts:

In the 1inch dApp, fill in the 'You pay' and 'You receive' fields.

• Opt for the recommended 'Auto' mode for a hassle-free experience, as it is set by default.

2. Execute the swap:

Click 'Permit and Swap and approve the transaction if necessary.

To customize your swap, click the gray box between the Permit and Swap button and the main swapping field that says it's gas-free. That lets you select your swap preset.

Fusion settings explained

Fusion settings provide different presets addressing user swap preferences, enabling users to tailor their swaps to their specific needs. Rate/Receive toggle shifts the view from rate (price) to the estimated token return. 

1. Auto. This preset automatically adjusts the rate and expiration based on market conditions and the swap amount. It ensures a balanced approach, adapting to current market dynamics without requiring manual adjustments.
2. Fast. The Fast preset sets a 3-minute auction for faster execution, which might result in a less optimal rate. This option is ideal for users who prioritize speed over rate optimization.
3. Fair. The Fair preset extends the auction duration to 6 minutes, focusing on achieving a better rate. This longer auction time increases the likelihood of securing a more favorable rate, offering a balance between speed and optimization.
4. Custom. The preset allows users to set auction times and rate limits as desired. This option is best for experienced users who have specific strategies and want full control over their swap parameters.

Key terms:

• Auction Time: The duration the order remains open, during which rates may decline.
• Est. Receive: The probable return at current market rates, with a possibility of receiving more in certain scenarios.
• Received (Min): The minimum amount for the swap, calculated with the slippage tolerance and entered amount.
• Est. Price: The anticipated rate for the token you're purchasing.

1inch Fusion API integration

Web3 platforms, projects, wallets, bots and more can leverage the 1inch Fusion API to offer streamlined and efficient swaps to their users. Available on the 1inch Developer Portal, this API ensures seamless functionality with a response time below 400 ms, making it one of the fastest on the market.

The Fusion API is particularly well-suited for CEXes and wallets, enabling them to provide additional services to their customers, such as access to rare coins and a variety of DeFi tokens, along with practically unlimited liquidity across multiple sources and platforms.

Additionally, the 1inch  Fusion API offers a compliant market-making environment where resolvers undergo rigorous due diligence, including KYC/AML procedures, sanction and policy checks as well as constant address screening for AML.

The 1inch Fusion API also presents an innovative solution for traditional finance institutions, facilitating seamless integration between traditional finance and DeFi. As interest in crypto continues to grow, traditional financial institutions can broaden their services by adding DeFi products, offering customers a convenient entry point into the DeFi space.

Projects integrating the 1inch Fusion API gain significant advantages, enabling them to build high-performing Web3 products and elevate their services. Trusted by industry leaders such as Ledger, Metamask, Trust Wallet, DeFi Llama, Trezor and others, 1inch APIs provide reliability and efficiency. For projects requiring significant trading volumes, custom endpoints are available to enhance performance and response times.

Enjoy the most efficient swaps in the market with 1inch Fusion, and refer to this  FAQ for additional guidance. Visit the 1inch Developer Portal if you are interested in integrating the Fusion API.