The acronym "OTC" is short for "Over-the-Counter", and originates as a trading term. In traditional sense, OTC is a decentralized broker-dealer network through which market participants can trade currencies, stocks, securities or other financial products directly, without the need for a centralized exchange. This p2p type of business is conducted via telephone or internet, resulting in a lower barriers to entry for participants. In other words, companies and stocks which do not meet centralized exchanges' requirements (of market capitalization, price per share, due diligence etc.) can participate in trades.
In the context of DeFi (decentralized finance) and 1inch Network operations, OTC Mode allows a user to execute a trade "off-chain" through registered platform Private Market Makers (PMMs).
Private Market Makers are entities that fill buy and sell orders through the 1inch API, thus facilitating trades on the 1inch Network. For the time being, there are four PMMs on Ethereum, and one on Binance Smart Chain. Each PMM successfully contributes to 1inch Network trading volume on a daily basis.
The new OTC mode allows users to execute a trade directly through these PMMs on 1inch. When switched "on", this mode disables all liquidity sources apart from PMMs and WETH (for Ethereum) and WBNB (for BNB Chain), giving the PMMs exclusive access to orders. This allows the user to place a trade with nearly 0% slippage (slippage tolerance is set to 0.1% for the technical purpose). So the amount of tokens you receive for the trade is equal to the amount seen in the confirmation window.
In order to trade in the OTC mode, simply:
go to https://app.1inch.io/;
enable OTC mode by going into settings and enabling "Routing Preset"
Now select OTC mode;
approve a token you intend to swap if needed;
confirm a swap on the 1inch UI and in your wallet application;
wait until the transaction is mined.
***As mentioned previously, enabling OTC mode will exclude all other liquidity sources and set the slippage tolerance at 0.1% automatically.
Trades in the OTC mode are supported on Ethereum and BNB Chain, and can be executed through all supported 1inch Network wallets.
Questions, comments, concerns? Feel free to contact us through the live chat window and we will be happy to assist.