In the fourth quarter of last year, 1inch experienced a significant increase in volumes and market dominance. According to a report by Messari, the popular decentralized exchange (DEX) aggregator recorded over $30 billion in executed volume, capturing a commanding 64% share of the Ethereum DEX aggregator market. This surge in volume can be attributed to several factors, including increased adoption of 1inch as a backend solution and the expansion of aggregator platforms.
The Role of New Products
The growth in transaction volume for 1inch can be primarily attributed to the introduction of new products. The Limit Order Protocol (LOP) and 1inch Fusion saw increased activity, driving transaction growth during the fourth quarter. However, the Aggregation Protocol witnessed a decline in transactions. This indicates that users were more engaged with the new offerings provided by 1inch, leading to a boost in volume.
During the fourth quarter, the share of 1inch trades conducted on Uniswap V3 and V2 saw a notable increase. Trades conducted on these two versions accounted for 40% of 1inch’s total trades and 8% of trade volume. The volume generated by 1inch on Uniswap rose from $5.6 billion in Q3 to $10 billion in Q4. This increase in volume was mainly derived from Curve and Dodo, which were the second and sixth most common execution venues, respectively.
PancakeSwap and Competitors
PancakeSwap continued to be a significant contributor to 1inch’s trade volume, receiving over $1 billion in volume for the second consecutive quarter. It accounted for 7% of 1inch’s total volume in Q4. Despite this, 1inch outperformed its competitors in terms of volume growth, expanding its market share from 59% in Q3 to 63% in Q4. The only significant competitor to gain market share during this period was CoW Swap, holding 11% of the aggregator volume on Ethereum.
Throughout Q4, the 1inch DAO focused on strategic treasury management. One notable move was diversifying its stablecoin holdings by swapping a million USDC for DAI. These funds were then deposited to earn interest as sDAI. This reallocation marked the first significant change since Q2, when 1inch deposited 1 million USDC in Aave for interest.
On the expenditure front, the 1inch DAO used slightly over $1 million in three distinct transactions. Notably, a significant amount of $890,000 USDC was allocated on December 30 to fund support services for users within the 1inch Network. Additionally, the staked amount of 1INCH saw a 7% increase in the fourth quarter, indicating growing confidence and participation from token holders.
With a surge in volumes and market dominance, 1inch solidified its position as a leading DEX aggregator. The increased adoption of 1inch as a backend solution, the introduction of new products, and the expansion of aggregator platforms all contributed to this growth. While facing competition from other aggregators, 1inch emerged as the clear winner in terms of volume growth and market share. Looking ahead, it will be interesting to see how 1inch continues to innovate and evolve in the rapidly changing DeFi landscape.
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