1inch, the popular DEX aggregator, experienced a significant surge in volumes and market dominance in the fourth quarter of last year. This article explores the factors behind its success and highlights the key findings from Messari’s report.
According to Messari’s report, 1inch recorded over $30 billion in executed volume, solidifying its position as a dominant player in the Ethereum DEX aggregator market. The substantial increase in volume from external sources suggests a growing adoption of 1inch as a backend solution and the expansion of aggregator platforms.
The transaction growth is primarily attributed to the introduction of new products, such as the Limit Order Protocol (LOP) and 1inch Fusion. These innovative offerings have attracted increased activity and participation from users. However, the Aggregation Protocol witnessed a decline in transactions during the quarter.
The share of 1inch trades conducted on Uniswap V3 and V2 saw a significant increase, constituting 40% of trades and 8% of trade volume, respectively. The volume generated by 1inch on these two Uniswap versions rose from $5.6 billion in Q3 to $10 billion in Q4. This growth was mainly derived from Curve and Dodo, which are the second and sixth most common execution venues.
PancakeSwap, a decentralized exchange on the Binance Smart Chain, continued to receive over $1 billion in trade volume from 1inch for the second consecutive quarter. This accounted for 7% of 1inch’s total volume in Q4. Despite its dominance on Ethereum, 1inch has recognized the value of diversifying its trading activity across different blockchain networks.
1inch experienced notably greater volume growth compared to its counterparts, leading to an expansion of its market share from 59% of trades in Q3 to 63% in Q4. The only significant competitor to gain market share in Q4 was CoW Swap, holding 11% of the aggregator volume on Ethereum during the quarter. Other notable players, such as ParaSwap and 0x, held 11% and 10% of the aggregator volume, respectively.
Throughout Q4, the 1inch DAO (Decentralized Autonomous Organization) focused on strategic treasury management. The DAO diversified its stablecoin holdings by swapping a million USDC for DAI. These funds were then deposited to earn interest as sDAI, marking the first reallocation since the Q2 deposit of 1 million USDC in Aave for interest.
On the expenditure front, the DAO utilized slightly over $1 million in three distinct transactions. Notably, on December 30, $890,000 USDC was allocated to fund support services for users within the 1inch Network. This investment demonstrates the DAO’s commitment to enhancing user experience and providing comprehensive support.
The fourth quarter of last year witnessed 1inch’s exponential growth in both volumes and market dominance. With its innovative products, strategic treasury management, and commitment to user support, 1inch has established itself as a dominant force in the DEX market. As the cryptocurrency landscape continues to evolve, it will be interesting to see how 1inch adapts and further solidifies its position in the market.
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