How the 1inch Network gives access to multiple liquidity sources
This is the second post in a series on the advantages offered by the 1inch Network. It explains how 1inch offers access to multiple liquidity sources.
Cryptocurrency exchanges are the backbone of the crypto industry, allowing users to buy and sell assets and serving as the ultimate liquidity providers. They enable the entire ecosystem to thrive and offer an entry point for millions of users joining the crypto space. However, centralized exchanges also represent a single point of failure in the industry as they remove the true ownership element associated with crypto.
Due to their decentralized and permissionless nature, decentralized exchanges (DEXes) — and especially automated market makers (AMMs) — have become extremely popular over the past year or so. As a leading DEX aggregating service, the 1inch Network has changed the industry with its unprecedented technology.
DEXes used to be fragmented, making the process of finding the best rate for a given trade incredibly complex. Moreover, large trades in a single liquidity pool can lead to higher slippage rates.
Acting as sort of a search engine for trading, the 1inch Aggregation Protocol can check prices across all DEXes and ensure users are always given the best rate for a swap. A single trade can also be split over different DEX liquidity pools, further optimizing the process.