1inch Exchange is a decentralized cryptocurrency exchange (DEX) aggregator used to buy or sell the cryptocurrency across multiple DEXs. Orders are split across multiple DEXs to find the best market price available by using arbitrage bots.
To achieve this manually would require several pairs of hands and lightning pace. However, 1inch Exchange achieves this in a single transaction. By searching across multiple DEXs, orders are split to minimize slippage. This can save a great deal of money when placing large orders in illiquid markets.
When using a crypto exchange to place large orders, traders are often caught out by slippage. Slippage is the difference between the price a trader expects to pay for an asset, and the actual price paid for the asset. If an exchange or a trading pair has low liquidity, even a modest order could dramatically push up a low-cap asset price.
Let’s say you wanted to buy 10,000 tokens from an exchange at a market price of $1 per token. If that exchange has low liquidity, the chances are that the market price could increase before your order is filled. This is because your large order is pumping the market price of that asset. Therefore, you could end up paying considerably more than $1 for your tokens.
This is why 1inch Exchange is becoming so popular among crypto traders and investors. By spreading orders across multiple decentralized exchanges (DEXs), the chances of slippage are reduced. As the liquidity used to facilitate an order is derived from multiple DEXs, the impact on price volatility as a result of a swap is lessened.