It really does not appear that the decentralized financial sector plans to slow down its development in 2020. Interest in this sector is still growing despite high Etherea transaction fees and the total value locked in this area is still breaking historical highs, recently achieving $ 51 billion.
1inch is a decentralized exchange or DEX, an aggregator that came on the DeFi scene later in 2020. The platform’s algorithm looks for the cheapest exchange rates between DEX, which are integrated into its ecosystem. 1inch also operates the automated market maker Mooniswap.
To find out how 1 inch wraps around such a punch, Cointelegraph spoke with Sergei Kunz, co-founder of the platform. The conversation is available on Cointelegraph’s YouTube channel.
How it all began?
Cointelegraph: How exactly did you get into the crypto, and when did you realize that the industry needed a DEX aggregator like 1 inch?
Sergey Kunz: Back to the roots where we started, the original idea was actually from [1inch co-founder] Anton, who suggested that it stand on the hackathon in 2019 – build one place to list all the different exchanges, and then just choose one where you can exchange for the best price.
But I also thought of improving it by splitting it into small pieces of the amount we swapped and exchanging it at multiple sources at the same time to reduce the price leverage, because the price impact was the biggest problem in the DeFi space on time.
“I talked to Vitalik Buterin and Hayden Adams of Uniswap at the hackathon, and I came up with the idea for both of them.” They said, “Yes, do it. That sounds great. ”
We actually built it for us. Anton kept exchanging. He needed the best rate and I had played with arbitration robots before. Somehow it really helped other people. We didn’t win any huge prizes at the hackathon, only a small prize: 300 bucks. So I was able to pay for the plane tickets.
CT: So, how long did it take to put it all together? One of the concerns in the DeFi industry is that protocols are created quickly and people get burned due to errors.
SK: Anton and I have 16 to 17 years of professional experience in software engineering and architecture. Anton had much more experience with cryptocurrency and algorithms. We actually built it in two nights. And one day before I went to bed, I built most of the frontend, the application. Anton wrote an algorithm and clever contracts, we put it together and worked without sleep for two nights.
“We started in December 2018 in Singapore. During one night, we built a project that won several sponsorship awards. So we had no expectations. “
We just started building. We used to build other things and here we wanted to solve only our own problem. And in the end, we got this huge traction because it just solved a huge problem in the DeFi space.
A token comes in
On December 24, 2020, the 1inch Foundation deployed and distributed native management and token tools on the platform. A total of 90 million INCH tokens were distributed to those who met certain criteria set by the platform.
CT: The project actually came to light after you released the 1INCH token. You don’t see the token as an investment tool, but people will still speculate about it, and in the end some may get burned. Have you considered this aspect?
SK: Yes, we received a lot of negative feedback from the community – from people who bought it early on the day of the release. In fact, the 1inch Foundation released a token and began distribution. The idea of distribution was to make the token more decentralized.
“We see no financial value behind the token.” So one 1INCH equals one 1INCH, nothing else. In fact, we didn’t even start with tokenomics. The idea of owning a 1INCH token in the first place right now is to participate in administration. “
So you have a ticket and with this ticket you get access to change some settings in the protocol. Of course, these people can take part in, for example, discussions in the administration forum and make suggestions.
After distributing the tokens, one happy 1-inch user received almost 10 million 1INCH, which accounted for approximately 11% of the total offer and was worth approximately $ 27 million at the time.
Kunz told Cointelegraph, “The guy was communicating with us. He designed, supported and introduced many other projects to us. He came to help us improve our community, etc. “
CT: How do gas prices on ether currently affect you as a platform? Given recent reports on integration with the Near Protocol, will you seek further diversification, or do you plan to remain loyal to the Ethereum ecosystem?
SK: So if you see that people are still exchanging, it’s because they have to change. Some people have loans somewhere and have to repay them. I would say that huge gas prices are bad for the whole area.
“I must say that something better than Ethereum can only be Ethereum.” We are waiting for Eth2, but they definitely have to scale. “
We have announced cooperation with Near Protocol because we are friends with them and Rainbow Bridge allows us to move funds from Ethereum to Near Protocol. We also announced a partnership with Tron. Many people certainly think it’s a scam and so on, and that it’s a copy of Ethereum. It’s important to us because people need it and there are people who use it. We also see DEXs on the platform there, so if you have DEXs, we can aggregate them.
Smart Chain Binance
On February 25, it was announced that 1 inch would be to Introduce the Binance Smart Chain | and that the platform would even run a BSC validator node. Both the 1inch aggregation protocol and its liquidity protocol will be available.
SK: It’s similar to Ethere. We are able to deploy the entire 1-inch network to the BSC and you can communicate with their bridge and move 1INCH tokens from Ethereum to the Binance Smart Chain.
If you move from Ethereum, you will lock your chips in the Binance Bridge on one side and the same amount will be unlocked in the BSC. This allows us to meet the needs of users. We got a lot of requests from people because there is a lot of money on the Binance Chain.
CT: What are your relationships with other DeFi companies like Uniswap? And what’s the last thing in your conflict with DeFi Pulse?
SK: About DeFi Pulse: Yes, we had a conflict. We still have a conflict with the founder of DeFi Pulse, because they just took advantage of our smart contracts without asking. Copyright was protected from the beginning, even before we launched the 1-inch protocol. We just wanted them to mention us in the source code when they published our pieces of code. And there were some misunderstandings with them and some bad jokes on my part as well.
But we try to stay friends with most projects or with all projects. I gave him [Scott Lewis, founder of DeFi Pulse] my hand, you know? I shook hands and said, “Let’s make it all clear,” and they simply refused. That’s fine for me.
But DeFi Pulse actually acknowledged our request to introduce us, at least on the testing platform and perhaps already on the main. [DeFi Pulse listed 1inch on Feb. 27] l So yeah, that’s great. But we needed to put pressure, social pressure. That’s why we are published this tweet – because we tried it first with emails and only social pressure helps.
“About other projects like Uniswap, I’d say we’re friends, but we talk like once a year.” They are certainly a little scared from my point of view, because we have introduced our own liquidity protocol. “
It’s much more efficient than Uniswap because we charge a fixed amount of fees. We don’t see them as some kind of competition – we have integrated them, we use them and we send a fair amount to everyone. So it’s just math.
CT: Let’s discuss the 1inch team. Own any of the 1INCH chips?
SK: If you see our token distribution, we have allocated about 22.5% to team members. They are locked for one year and will be unlocked in seven steps over the next three years. In total, we have four years of entitlement. Right now, no one on our team – including me – had any chips in his pocket. Tokens are frozen in multisig right now. Of course, everyone on the team gets a specific amount of token share to get the right commitment.
We see it as not having to work for someone like society. They work for themselves because they have these tokens, and they release the maximum within four years. We have a great team performance. Most of them are hackers and function themselves as 12, 14, 16 hours a day, sometimes just to provide a specific function, as is the case right now with adequate funding.
CT: And now generally move away to the DeFi space. What do you think will happen to DeFi in 2021?
SK: Right now I see a huge point of pain, which is the price of gas. It is not possible to involve new people directly in Etherea because they will have to pay a lot of money. We will see solutions to these problems by solving the second layer or improving this problem by seeing people moving to other chains, such as the Binance Smart Chain.
“Optimistic cumulative updates will be released really soon, from what I understand.” We will definitely participate in this movement and wait for Eth2. So we have to move fast. “
Also the number of transactions that miners can cover. When we have better throughput and lower gas costs, we can create much better products with a better user experience.
This interview has been modified and shortened for clarity. To watch a video interview, visit the Cointelegraph YouTube channel.