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Why is using 1inch better than a DEX (like Uniswap or Pancakeswap)?
Why is using 1inch better than a DEX (like Uniswap or Pancakeswap)?

How 1inch Network will save you money when trading in DeFi

Matt avatar
Written by Matt
Updated over a week ago

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.

As you can see in this image above, the 1inch router will always give a better rate, which puts more money in its users' wallets. This difference only becomes more apparent as the trade size increases.

Transaction splitting

Transaction splitting is also another key component to how 1inch 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)

In this image, you can see each individual liquidity source that 1inch routes a UNI-1INCH trade through. Also worth noting, are connector tokens. These are highly liquid tokens that the 1inch router will use as part of the swap creating additional savings for the user.

Gas optimization

In addition to efficient routing and transaction splitting, 1inch also works to optimize gas fees. 1inch Network contributors are continually updating the protocol to enhance gas optimization, resulting in cheaper gas fees than most of the leading DEXes.

In this image, you can see that a simple 10 ETH -> DAI swap through 1inch is 33% cheaper than Uniswap... in gas fees alone!

Due to the protocol's efficiency, gas fees for smaller transactions are often cheaper than Uniswap, even if 1inch routes the transaction through Uniswap itself.

Fusion Mode

With 1inch Fusion, a new 1inch swap engine is introduced for filling and executing orders. It allows users to swap at a competitive rate without needing native tokens for gas fees and seamlessly prevents front-running (MEV) attacks. In a general sense, it can be seen as a total overhaul of 1inch Network’s existing Limit order and aggregation protocols.

Similar to a Classic swap, you first enter the token amounts that you want to swap. This designates you as the "maker". Once the order is placed, resolvers (takers) compete to fill your order and also pay for any associated gas fees!

With all of these unique qualities combined, anyone who uses 1inch will save substantial amounts of capital in comparison to using individual dexes like Uniswap or Pancakeswap.

Questions, comments, concerns? Feel free to reach out to us in the Live Support Chat!

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