1inch Raises $175 Million in Token Sale

1inch Secures $175 Million in Funding

1inch, a well-known aggregator of decentralized protocols, has successfully completed a funding round totaling $175 million, designated as a Series B. However, this funding differs from conventional venture capital arrangements.

Rather than relinquishing equity, 1inch facilitated a private token sale, distributing $175 million worth of 1INCH tokens to institutional investors.

Understanding 1inch and DeFi

For those unfamiliar, 1inch is a prominent player in the DeFi (decentralized finance) space. It enhances the efficiency of decentralized transactions.

When exchanging cryptocurrencies, several avenues exist, but historically, exchanges were largely centralized.

The Shift Towards Decentralization

Centralized exchanges, like Coinbase, FTX, Kraken, and Binance, have gained prominence by facilitating trades between various assets.

However, this model introduces a single point of failure, contradicting the core principle of blockchain technology – decentralization.

Vitalik Buterin expressed a strong preference for the decline of centralized exchanges, stating in a 2018 TechCrunch interview, “I definitely hope centralized exchanges go burn in hell as much as possible.”

Decentralized Exchanges and 1inch’s Role

In recent years, numerous teams have developed decentralized exchanges across multiple blockchains.

On the Ethereum blockchain, platforms such as Uniswap, SushiSwap, and PancakeSwap enable direct token exchange through liquidity pools.

The 1inch Network aggregates numerous decentralized protocols, allowing traders to identify the most favorable exchange rates across various decentralized exchanges.

Key competitors to 1inch include Matcha (0x) and ParaSwap.

User Growth and Trading Volume

Data from a Dune query indicates that 1inch is nearing 1 million users on Ethereum.

Approximately 195,000 users have engaged with 1inch within the last 30 days.

Over the past two years, users have executed over $100 billion in crypto asset trades utilizing the 1inch platform.

Details of the Funding Round

The 1inch foundation manages the 1INCH token supply.

A portion of this supply has been allocated to 1inch Limited to fund Growth & Development initiatives.

This fund constitutes 14% of the total 1INCH token supply, with 8% utilized for the Series B round.

Investor Participation

The Series B round was spearheaded by Amber Group, attracting participation from around 50 investors.

Notable investors include Jane Street, VanEck, Fenbushi Capital, Alameda Research, Celsius, Nexo, Tribe Capital, and Gemini Frontier Fund.

Investors acquired tokens from both the Growth & Development Fund and existing investors seeking to divest a portion of their holdings.

Navigating Regulatory Challenges

1inch has encountered regulatory hurdles, prompting the company to block U.S. IP addresses from accessing the application in September.

The company confirmed that these geoblocking measures are effectively restricting access from U.S. territories.

This action followed Uniswap’s earlier restriction of certain tokens within the U.S.

Introducing 1inch Pro

1inch is developing 1inch Pro, a separate, permissioned service designed to comply with U.S. regulations.

This new service will adhere to KYC (‘know your customer’) and AML (‘anti-money laundering’) regulations.

1inch and 1inch Pro will operate independently, with segregated liquidity pools.

1inch Limited will independently provide liquidity for 1inch Pro, aiming to attract institutional investors.

Users outside the U.S. will continue to have access to the existing 1inch Network.

Future Outlook

Currently, there is no definitive launch date for 1inch Pro.

The company is actively collaborating with legal firms to navigate the evolving regulatory landscape surrounding DeFi in the U.S.

However, the process may be prolonged due to the inherent uncertainty in U.S. DeFi regulation.