1inch Fusion FAQ

Fusion mode - is the default mode for users. It doesn't require any gas fees for the user to execute a swap (outside of “fast” mode), as the "taker" aka resolver pays for all related transaction costs. Each order is filled within a specific price range starting from high to low (dutch auction), designed to incentivize resolvers to take orders. This revolutionizes the execution of swaps on decentralized exchanges. Fusion mode also provides native front-running protection, as the resolvers who fill order bundle transactions before sending them to the mempool. The RPC in your wallet does not determine the RPC the fusion transaction will be sent through.

Within Fusion mode, there are 4 different options:

This is the original 1inch aggregation protocol. With Classic mode, users must pay gas fees for every swap, however they can execute the transaction almost immediately and at (or near) the quoted rate.

***Please note: The quoted rate might be lower with Classic mode; however, after taking gas costs into account, Fusion swaps have a higher net returned amount potential.

In a typical Dutch auction, the price of an item starts high and is progressively lowered until a bidder accepts the current price, thereby winning the auction. With 1inch Fusion Dutch auctions, the exchange rate for an asset swap order starts high and gradually decreases until a Resolver accepts the rate and executes the swap.

The key benefit here is that your order has a good chance of being filled swiftly, as multiple Resolvers are motivated to complete the swap before the rate drops too low. This mechanism creates a delicate balance between the interests of both the user seeking a favorable swap rate and the Resolvers looking for profitable opportunities.

Each swap has a specific time window for a resolver to take trade. The longer the swap window, the higher chance there is of a resolver taking the order. If a resolver did not take your trade within the allotted time for your order, it will expire and you will have to resubmit it.

The "estimated" amount is the expected return for your trade, based off of current market rates. The "min" amount is the estimated amount minus your allotted slippage tolerance.

To access the swap settings in Fusion mode, click this little icon:

You will then be able to see all of the Fusion mode settings:

Starting from the top, here are descriptions of the swap settings:
​

"Max": This will enter maximum balance of the selected token in your wallet into the swap window.

​Fusion/Classic buttons: Selecting either "Fusion" or "Classic" will change the mode in which you are swapping.

Settlement fee: This is the estimated amount that the resolver will charge for filling the order (paid with the amount tokens returned)

"Auto, Fair, Fast, custom" buttons: These options determine the auction length and amount received parameters that your swap is completed with.

​Rate/receive: This toggles the parameters view of the rate (price) to the estimated number of tokens returned.

USDC/DAI (see example above): This toggles the rate (or returned amount) with the reverse rate (or returned amount)

"Max", "min", "auction time":

​Est. Receive: This is the best return amount at current market rates. In some scenarios, the actual received amount may be higher

Est. Buy Price: The estimated rate for the token purchased (open the dropdown to see the estimated token sell rate)

Min. Buy Price: The lowest possible rate for the token purchased (open the dropdown to see the minimum token sell rate)

The rewards for staking 1INCH tokens comes from a few places:

A note on APYs - When you select a resolver to delegate to, you will see a quoted APY next to each individual farm. This APY represents the average rewards that have been distributed throughout the life of each resolver's farming/incentive program. This APY is quoted in percentage terms, and is distributed in the form of tokens. Each resolver has a different APY, and therefore each of the resolver farms are competing for delegation power of stakers.

The penalty for unstaking 1INCH tokens before the lock time is taken in the form of 1INCH tokens. This penalty decreases exponentially with time, and is inversely proportionate to the amount of Unicorn power that decreases during the staking period.

The lock period is between 1 month and 2 years. The longer the locking period the more “staking power” a resolver is granted at the beginning of the period.

However, the increase in power is not linear:

For those who want to withdraw their stake, they must wait until the initial token penalty threshold has passed.

With the introduction of 1inch Fusion Mode, the previous stake reward program was deprecated, and now only resolvers are eligible to receive rewards for gas fees paid to resolve/take 1inch Fusion swaps. Since the resolvers pay Fusion Mode gas fees, there would be nothing to refund back to users who create the swap.

For Delegating, there are two different pods: resolving and governance. A minimum of 100% of the Unicorn power that is acquired from staking 1inch can be delegated to either pod (but not both). The Unicorn power decay rate is then transferred to the delegate, and is kept separate from their pre-existing rate.

For example if the delegatee has 2 years left in their lock period, and the delegator has 3 years, once the delegation is complete, the delegatee would have a 5 year decay period applied to the total amount of power held.

With resolving pods, delegators can choose which resolver to delegate to, based off of the reward structure they prefer.

Generally speaking, transactions can be front-run aka "Sandwich Attacked" between the time they are submitted to the mempool and the time that the block is added to the chain. (See this article for more info)

All 1inch Fusion swaps are matched directly with Resolvers (takers), and are subsequently placed into a bundle with other orders before being included in the block on-chain. Since a Fusion swap is combined with other transactions, this completely eliminates the risk of your swap being front-run.

1inch Resolvers are top holders of st1INCH tokens, who are designated to fill the orders of 1inch swappers. Resolvers fall within the top 10 balances of Unicorn Power can be exclusively registered to fill orders.
​
​***Only approved resolvers have the chance of earning fees for filling users’ orders.

To become a resolver, you need a balance of staked 1INCH (st1INCH) tokens, meeting the minimum requirement of 5% of the total supply of Unicorn Power (UP). The maximum limit of listed resolvers is 10. Holding st1INCH tokens grants users UP, which can be utilized for farming programs or various activities. The duration of the token lock, ranging from 1 month to 2 years, directly correlates to the voting power gained as a resolver.

To uphold the integrity of the 1inch Fusion mode, a smart contract-enforced maximum gas fee rule is in place. This cap on priority gas fees prevents any attempt to bypass the limit, including direct payments to a block builder’s coinbase. Violations will incur penalties.

Follow these steps to begin resolving:

The duration of the token lock, ranging from 1 month to 2 years, directly correlates to the voting power gained as a resolver.

The top 10 resolvers have the privilege of filling Fusion swaps. Earning a spot on this list requires staking a sufficient amount of 1INCH tokens to acquire the necessary UP for a top 10 ranking. Resolvers can either stake tokens individually or attract users who delegate voting power in return for farming rewards.

To uphold the integrity of the 1inch Fusion mode, a smart contract-enforced maximum gas fee rule is in place. This cap on priority gas fees prevents any attempt to bypass the limit, including direct payments to a block builder’s coinbase. Violations will incur penalties.

Have further questions? Feel free to reach out to us in the live support chat!