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1inch co-founder explains how to fix crypto’s fragmented liquidity problem
Crypto is fractured. There are now millions of different blockchains, with thousands more being launched every single day. At the height of the most recent craze in early 2025, the Solana platform Pump.fun was facilitating an average of over 27,000 new tokens every 24 hours. Over 100 tokens now have a market cap of over $1 billion.
In most cases, layer-1 blockchains do not play well with other layer-1 blockchains. For example, a trader cannot turn their Solana into Ethereum directly, or vice versa. The networks don't and will not communicate with each other, or at least not yet. This is a problem for investors and traders who have lots of liquidity spread out on many different ecosystems.
Some argue that these silos will cause the space to consolidate, with just a few major chains reigning supreme. Others, such as Sergej Kunz, co-founder of 1inch, believe that third parties can solve this issue by building platforms that allow users to move money from one chain to another easily and seamlessly.
In an interview, Kunz explained that the different layer-1s today offer something different from the others, and that there will always be new projects emerging when new problems are uncovered in the established networks. That’s why 1inch launched Aqua, a shared liquidity layer protocol.
What is a liquidity pool?
A liquidity pool is essentially a big pot of crypto tokens that any individual investor can contribute to. Decentralized exchanges (DEXs) leverage liquidity pools and their associated smart contracts to automatically execute transactions instantly. Liquidity providers receive the transaction fees in return for locking up their assets. One area of inefficiency in this model is that most of the liquidity sits in the pool doing nothing.
1inch’s unique approach
1inch is moving on from liquidity pools with Aqua. Instead, assets held in your wallet can be swapped via “virtual trading pairs.” Virtual trading pairs allow the user to set a price range and fees while avoiding the fragmentation of liquidity that liquidity pools require today. Liquidity can be used for multiple purposes at the same time, and security is improved because the assets are exposed to smart contract vulnerabilities for a shorter period of time.
Kunz believes this approach can help unify a fragmented industry without forcing it to consolidate. Instead of betting on one chain to win, Aqua is built on the assumption that innovation will continue to produce new networks, new assets, and new use cases. If liquidity can move more efficiently and securely across that landscape, users may finally experience a crypto ecosystem that feels connected rather than chaotic.
This article has been published on TheStreet via Yahoo.com.
1inch co-founder explains how to fix crypto’s fragmented liquidity problem
Crypto is fractured. There are now millions of different blockchains, with thousands more being launched every single day. At the height of the most recent craze in early 2025, the Solana platform Pump.fun was facilitating an average of over 27,000 new tokens every 24 hours. Over 100 ...
finance.yahoo.com
