1inch, the popular decentralized exchange (DEX) aggregator, witnessed a remarkable surge in volumes and market dominance in the fourth quarter of last year. This surge was accompanied by a broader market resurgence, indicating increased adoption and trust from users. In this article, we will analyze the factors that contributed to 1inch’s success and examine its market share growth.
According to a report from Messari, 1inch recorded over $30 billion in executed volume during the fourth quarter, positioning itself as a leading player in the Ethereum DEX aggregator market. With a commanding 64% market share, 1inch outperformed its competitors in the space. This significant increase in volume from external sources highlights the growing adoption of 1inch as a backend solution and the expansion of aggregator platforms.
The surge in transactions can be primarily attributed to the introduction of new products by 1inch. Increased activity in the Limit Order Protocol (LOP) and 1inch Fusion played a crucial role in driving transaction growth. However, transactions in the Aggregation Protocol witnessed a decline during the quarter, suggesting a shift in user preferences towards these newer offerings.
1inch’s 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 versions of Uniswap rose from $5.6 billion in Q3 to $10 billion in Q4. This growth in share was mainly derived from platforms like Curve and Dodo, which emerged as the second and sixth most common execution venues for 1inch trades.
PancakeSwap, a leading DEX 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. The notable growth in volume propelled 1inch’s market share from 59% in Q3 to 63% in Q4. However, it’s important to note that CoW Swap managed to gain market share, holding 11% of the aggregator volume on Ethereum during the quarter.
While 1inch dominated the DEX aggregator market, other competitors like ParaSwap and 0x held notable shares of 11% and 10%, respectively, in Q4. These competitors underline the presence of a competitive landscape in the DEX aggregator space, potentially driving innovation and improving user experience.
Throughout Q4, the 1inch DAO focused on strategic treasury management by diversifying its stablecoin holdings. As part of this strategy, the DAO swapped a million USDC for DAI, depositing the funds to earn interest as sDAI. This reallocation marked a significant step for the DAO since its initial deposit of 1 million USDC in Aave for interest during Q2.
In terms of expenditure, the 1inch 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. Additionally, the staked amount of 1INCH experienced a 7% increase in the fourth quarter, indicating growing confidence and commitment from the community.
The fourth quarter of last year proved to be a momentous period for 1inch, with a significant surge in volumes and market dominance. The introduction of new products, strategic treasury management, and partnerships with platforms like Uniswap and PancakeSwap contributed to 1inch’s success. As the DEX aggregator market continues to evolve, we can expect fierce competition among players, ultimately benefitting users with improved services and options.
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