A Deep Dive into 1inch and Their Ambitious Pursuit to Create the Ultimate DeFi Aggregator

Aleksandra Fetisova , partnerships & BD at 1inch In this conversation, she elaborates on how the company is spearheading advancements in the DeFi space. From addressing compatibility issues to refining user experiences for both individual and institutional clients, she emphasizes that 1inch is about more than just competitive pricing; they are leading the industry with unique offerings like Fusion and safeguards against MEV.

During this interview, Aleksandra sheds light on the primary obstacles to achieving effective cross-chain liquidity, the significance of institutional adoption for the expansion of DeFi, and how emerging developments like Bitcoin-focused DeFi and AI-enhanced tools are influencing the current market landscape.

Can you share your journey to Web3? 

Having spent seven years in banking, I had an unexpected reunion with one of my previous clients, Konstantin Lomashuk, while I was out one day. Over lunch, he shared insights into his work with cyber.Fund, Satoshi Fund, and currently Lido, and he graciously invited me to collaborate with him.

Shortly after our chat, he asked me to swing by his office. He was engaged in launching an ICO and delving into the blockchain space, which marked the beginning of my journey. I dedicated the following four years working alongside his team at cyber.Fund and Satoshi Fund, even contributing to a project that grew into an online casino.

Alongside my good friend Nadia, who now operates Cyber Academy, we played an essential role in organizing various cyber events. Ultimately, I reached a point of burnout after four years and transitioned to advising Sensorium Galaxy and engaging with multiple accelerator programs.

During my time with Konstantin, I also participated in automotive hackathons, which is where I crossed paths with the 1inch team. At the same time, I was immersed in another thrilling project named Azuro that focused on creating the necessary framework for prediction markets. Sergej from 1inch noticed my work and offered me a part-time position on their team. That’s how I became involved.

Looking back, I feel incredibly fortunate to be surrounded by a global community of brilliant innovators. To me, 1inch is not just a project; it feels like a family. The co-founders act as both mentors and friends, and together as DeFi visionaries, we’re on a mission to reshape the financial landscape and advocate for a more decentralized approach to finance.

What technical challenges are often overlooked in the pursuit of a functional aggregator within the DeFi ecosystem?

From a technical standpoint, achieving true interoperability poses a significant difficulty. Though I wouldn't say it's entirely underestimated, it definitely stands as one of the most formidable obstacles.

We've tackled a significant portion of this challenge with our Fusion solution for EVM layers, and you can expect innovative solutions for Layer 1s in the near future. Our ultimate goal is to foster seamless interoperability across various networks, effectively establishing a chain-agnostic, cross-chain liquidity infrastructure.

What are the primary hurdles to achieving smooth cross-chain liquidity aggregation in DeFi, and how is 1inch addressing them?

A core obstacle to seamless cross-chain liquidity aggregation is the user experience, not just for individual users but for B2B clients as well. The UX design for liquidity providers in the business-to-business sector requires significant improvement.

Another critical challenge lies in the number of users participating in the market. It’s essential to create an effortless experience for third-party resolvers, ensuring they have easy onboarding and adequate incentives. Simultaneously, we must broaden our user demographics so liquidity providers can see a profitable return on their engagement.

Given that Maximum Extractable Value (MEV) poses challenges for DeFi traders, what advancements are being explored to alleviate its effects?

MEV-related issues, particularly sandwich attacks, are a significant concern within DeFi. That's why our team conceptualized Fusion as a proactive solution against MEV.

Prior to the introduction of Fusion, nearly $4 billion in liquidity had been compromised by these sandwich attacks. This situation heavily influenced our decision to develop our MEV protection mechanism integrated within Fusion Plus. This innovative system not only offers protection against MEV but also facilitates gasless transactions and aggregates liquidity across both centralized and decentralized exchanges.

As competition among DEX aggregators intensifies, how can companies distinguish themselves beyond improved pricing?

Competitive pricing serves as a crucial differentiating factor because, naturally, users will always opt for the best rates available. When wallets provide a range of choices, users tend to select platforms that present the most advantageous deals.

Nevertheless, distinguishing features extend beyond mere pricing. User experience plays an essential role. In the Web3 environment, UX remains a prominent industry challenge, and this is equally true for aggregators.

At 1inch, our developers and CTO, Anton, are true visionaries. They seem to anticipate industry trends before they materialize. Our aim isn't just to compete; we strive to spearhead innovation. A prime example is our successful implementation of Fusion, which prompted Uniswap to introduce UniswapX in response, acknowledging the effectiveness of our approach. This reinforces the importance of staying ahead of trends for successful differentiation.

How do decentralized exchanges handle the risks associated with malicious liquidity pools, and what industry-wide measures are implemented to combat them?

The most effective strategy to mitigate the threat of malicious liquidity pools is through education. Educating users can empower them to avoid risks before they escalate.

Additionally, partnering with reputable and experienced firms is paramount. Conducting thorough security audits on projects is crucial to ensure they have been evaluated multiple times prior to integration, enhancing risk management. These three pillars—education, strong partnerships, and rigorous security audits—are essential elements in minimizing risks.

What is the impact of institutional DeFi adoption on the future growth and evolution of DEX aggregators?

Institutional endorsement serves as a stepping stone toward broader acceptance and adoption. Once major institutions fully embrace decentralized finance, we can anticipate a significant surge in trading activity, enhancing revenue and liquidity for decentralized exchange aggregators.

This could pave the way for the first billion users entering the space, followed by many more. As institutions come on board, it lends credibility to DeFi and encourages wider adoption.

What macroeconomic factors do you think are often overlooked that could greatly influence DeFi adoption?

While institutional support remains a key driver, political backing is another critical yet often ignored factor. When influential leaders publicly champion cryptocurrencies, it garners more interest and investment into the sector.

A notable instance is the case of the Trump coin. Even though I’m not particularly fond of meme cryptocurrencies—given their mixed outcomes—it did successfully attract hundreds of thousands of new participants. When global leaders openly support crypto, it creates a domino effect that accelerates adoption.

How do you envision the progression of DeFi over the next five years, and what role will aggregation serve in that growth?

We are driven by the belief that decentralized finance will democratize financial access for all. People will enjoy instantaneous, permissionless financial transactions without the delays that often accompany traditional finance.

DeFi is already influencing economies in transformative ways. For example, consider the impact of Axie Infinity in the Philippines, or how DeFi is bringing emerging opportunities to underserved regions in Africa.

The concept of aggregation will remain pivotal, ensuring users can always access the best rates while enjoying a superior experience.

What trends in Web3 and DeFi are noteworthy now compared to last year?

At present, AI stands at the forefront of trends in Web3, with AI-driven assistants aiding new users in navigating self-custody wallets, understanding risks, and learning best practices.

Meme coins have also gained traction, drawing in many newcomers. However, it's essential to understand that they carry inherent risks. Unlike conventional gambling, the DeFi space lacks sufficient regulatory oversight to guide users against making risky investments.

Additionally, Bitcoin is now finding its place within the DeFi ecosystem. Historically, Bitcoin and DeFi operated in separate realms, but we're now witnessing an integration of Bitcoin into DeFi applications—a significant evolution from previous market cycles.

Furthermore, established financial institutions are beginning to enter the DeFi space. Past cycles were predominantly about gaming and experimenting within Web3, but this time we're observing the emergence of serious, institutional players in the sector.

What significant advancements are anticipated in Web3 and DeFi in the near future?

This is a question best directed to Anton, our co-founder and the mastermind behind many of our ventures. Nevertheless, I can share that our focus is on making liquidity more accessible, cross-chain, and interoperable.

We’re also developing self-custody, chain-agnostic atomic swaps—innovative solutions designed to remove reliance on third-party entities.

An additional key development is the growing importance of messaging platforms in promoting crypto adoption. Services like Telegram, KakaoTalk, and Line are implementing mini-apps, which could serve as gateways for introducing many users to DeFi, marking a promising area for growth in the next six to twelve months.