It really doesn’t seem like the decentralized financial sector plans to slow its development in 2020. Interest in this sector continues to grow despite high transaction fees for Ethereum, and the total value tied up in the space continues to break all-time highs. recently reached $ 51 billion.
1 Zoll is a DEX (Decentral Exchange) aggregator that entered the DeFi scene at the end of 2020. The platform’s algorithm looks for the most favorable exchange rates among the DEXs built into its ecosystem. 1inch also operates the automated market maker Mooniswap.
According to data, January was the biggest month for DEXes, and 1 inch played a role in reaching that milestone. In terms of the number of dealers, it currently ranks second behind Uniswap.
To find out how 1 inch packs such a punch, Cointelegraph spoke to Sergej Kunz, co-founder of the platform. The interview is available on Cointelegraph’s YouTube channel.
How did it all start?
Cointelegraph: How exactly did you get into Crypto and at what point did you realize the industry needed a DEX aggregator like 1 inch?
Sergej Kunz: Back to basics, where we started, the original idea was actually from [1inch co-founder] Anton who suggested building it at a hackathon in 2019 – to build a place that lists all of the different exchanges and then you can just pick one to swap at the best price.
But I also had the idea of improving this by splitting the amount we are going to trade into small pieces and swapping it for multiple sources at the same time to reduce the price leverage, as the price impact was the biggest problem in the DeFi area of Time .
“At the hackathon, I spoke to Vitalik Buterin and Hayden Adams from Uniswap and the idea hit both of them. They said, “Yes, do it. It all sounds great. ”
We actually built it for ourselves. Anton traded all the time. He needed the best price and I played around with arbitrage bots beforehand. In a way, it was really helpful to other people. We didn’t win any big prizes at the hackathon, just a small one: $ 300. So I was able to pay for my tickets for the plane.
CT: How long did it take you to put it all together? A concern in the DeFi industry is that logs are generated quickly and people get burned for failure.
SK: Anton and I together have 16 to 17 years of professional experience in software development and architecture. Anton had a lot more experience with cryptocurrency and algorithms. We actually built it over two nights. And the day before I went to sleep, I built most of the front end, the app. Anton wrote the algorithm and the smart contracts, and we put it together and worked without sleep for over two nights.
“We started in Singapore in December 2018. We built a project over one night that received some sponsorship awards. So we had no expectations. “
We just started building. We have already built other things and here we just wanted to solve our own problem. And in the end we have this enormous traction because it has just solved a big problem in the DeFi area.
The token comes in
On December 24, 2020, the 1-Zoll-Stiftung provided the platform’s native governance and utility token and distributed it. A total of 90 million INCH tokens were distributed to those who met certain criteria set by the platform.
CT: The project really got known after you released the 1-INCH token. They don’t see the token as an investment vehicle, but people will still speculate about it and at some point some may get burned. Did you take this aspect into account?
SK: Yes, we got a lot of negative feedback from the community – from the people who bought at the beginning of the release day. In fact, the 1 inch foundation issued the token and started distribution. The idea behind the distribution was to make the token more decentralized.
“We don’t see any financial value behind the token. So a 1INCH corresponds to a 1INCH, nothing else. Actually, we didn’t even start with tokenomics. The idea of even owning the 1-INCH token now is to get involved in governance. “
So you have some kind of ticket, and with that ticket you get access to change some settings in the log. Of course, these people can also take part in the governance forum discussions and make suggestions, for example.
In distributing the tokens, one lucky 1-inch user received nearly 10 million 1-INCHES, which was around 11% of the total supply and was worth around $ 27 million at the time.
Kunz said to Cointelegraph: “This guy communicated with us. He suggested a lot, gave support and introduced us to other projects. He came to us to help us improve our community and so on. “
The gas effect
CT: How are Ethereum gas prices currently affecting you as a platform? Given the recent news on integration with Near Protocol, will you seek further diversification or do you plan to remain loyal to the Ethereum ecosystem?
SK: So if you see people still swapping, it’s because they have to swap. Some people have loans somewhere and need to pay them back. Huge gas prices, I would say, are bad for the entire space.
“I have to say that anything better than Ethereum can only be Ethereum. We are waiting for Eth2 but they definitely need to scale. “
We announced a collaboration with Near Protocol because we are friends with them and the Rainbow Bridge allows us to move funds from Ethereum to Near Protocol. We have also announced a collaboration with Tron. Surely a lot of people think that this is a scam etc and that it is a copy of Ethereum. It matters to us because people need it and there are people who use it. We also see DEXes on the platform there. So if you have DEXes we can aggregate them.
Binance Smart Chain
On February 25, it was announced that 1 inch will be introduced on Binance Smart Chain and that a BSC validation node is even running on the platform. Both the 1 inch aggregation log and the liquidity log will be available.
SK: It’s similar to Ethereum. We are able to provide the entire 1 inch network for BSC and you can interact with their bridge and move 1 inch tokens from Ethereum to Binance Smart Chain.
If you move away from Ethereum, lock your tokens on one side in Binance’s bridge and the same amount will be unlocked on BSC. This enables us to meet the needs of the users. We got a lot of inquiries from people because there is a lot of money on Binance Chain.
CT: How are your relationships with other DeFi companies like Uniswap? And what’s the latest on your conflict with DeFi Pulse?
SK: About DeFi Pulse: Yes, we had a conflict. We still have a conflict with the founder of DeFi Pulse for just using our smart contracts without asking. It was copyrighted from the start, even before we even started the 1-inch protocol. We just wanted them to only mention us in the source code when they released our pieces of code. And there was some misunderstanding with them and some bad jokes on my part too.
But we try to stay friends with most projects or with all projects. I gave him [Scott Lewis, founder of DeFi Pulse] my hand you know I shook my hand and said, “Let’s work this out,” and they just refused. That is good for me.
But DeFi Pulse, they actually confirmed our request to at least list us on the test platform and maybe already on the main platform. [DeFi Pulse listed 1inch on Feb. 27] l So yeah, that’s great. But we had to apply pressure, social pressure. That’s why we published this tweet – because we tried email first and only social pressure helps.
“About other projects like Uniswap, I would say we’re friends, but we talk like once a year. From my point of view, they are certainly a little scared because we have introduced our own liquidity protocol. “
It’s much more efficient than Uniswap as we charge a fixed amount of fees. We don’t see it as a kind of competition – we’ve integrated it, we use it and we send everyone a fair volume. So this is just math.
CT: Let’s discuss the 1 inch team. Do you have one of the 1-INCH tokens?
SK: If you can see our distribution of the token, we assigned about 22.5% to team members. They’re locked for a year and we unlocked them in seven steps over the next three years. So we have a total of four years of embargo. At the moment, nobody in our team – including me – has any tokens in their pockets. Tokens have just frozen on the multisig. Of course, everyone on the team receives a certain share of the tokens in order to get the right commitment.
We see it that way that you don’t have to work for someone, like for a company. They work for themselves because they have these tokens and they will do their best in the four years. We got a great performance from the team. Most of them are hackers and they sometimes work like 12, 14, 16 hours a day for themselves, sometimes just to provide a specific role like we currently have in providing financial reconciliations.
CT: And now just zoom out on the DeFi area in general. What do you think will happen to DeFi in 2021?
SK: I am currently seeing a major pain point, which is the price of gas. It is not possible to integrate new people directly into Ethereum as they have to pay a lot of money. We will see a solution to these problems with Layer 2 solutions or improve this problem by seeing people switch to other chains such as Binance Smart Chain.
“As far as I understand, optimistic rollups will be released very soon. We will certainly participate in this movement and we are waiting for Eth2. So we have to move quickly. “
Also the number of transactions that can be covered by the miners. When we have better throughput and lower gas costs, we can build much better products with better user experiences.
This interview has been edited and shortened for the sake of clarity. To watch the video interview, please visit Cointelegraph’s YouTube channel.