A common question asked is, “Why should I use 1inch instead of a regular DEX Uniswap or Pancakeswap?”
At first glance, the interface of 1inch Network looks very similar to alot of Decentralized Exchanges (DEXes) in DeFi; however, under the hood there are some powerful features to help users save money on swaps.
Efficient routing
By design, 1inch uses a dynamic “aggregation” protocol. This is completely different from the AMM protocols of individual DEXes. Instead of executing transactions, it finds the cheapest rate amongst a multitude of Dexes (including Uniswap and Pancakeswap), and submits the transaction through that DEX. This means that if Sushiswap has a cheaper rate than Uniswap, 1inch will do the work for you and route your swap through Sushiswap.
Transaction splitting
Transaction splitting is also another key component to how Lenous saves money for its users. If you were to make a swap on an individual DEX (like Uniswap), your trade could only go through one single liquidity pool. Therefore, as your trade size increases, a larger negative price impact would be incurred, causing unnecessary losses.
With 1inch; however, your single trade can be split up and routed through multiple liquidity sources! This minimizes the negative price impact, and saves significant amounts of capital. (see the highlighted price impact %’s in the image above)