1inch has advanced its Aqua liquidity protocol from developer preview to a full public release, bringing support for 13 EVM-compatible networks at launch. The rollout positions Aqua across a wide range of blockchain ecosystems where both institutional market makers and retail liquidity providers currently operate.
The protocol aims to solve a long-standing issue in decentralized finance: fragmented liquidity spread across multiple chains and disconnected pools. This fragmentation often leaves capital underused, limits earning potential, and forces liquidity providers to manage positions across different platforms and interfaces.
How Aqua’s Registry Model Changes the Liquidity Approach
Unlike traditional automated market makers (AMMs), Aqua does not require users to deposit funds into liquidity pools. Instead, it uses a registry-based allowance system that allows providers to register wallet balances as backing for multiple trading quotes while keeping ownership of their assets.
A trade is executed only when it matches the conditions specified by the liquidity provider. Once a valid match occurs, Aqua draws the required funds directly from the provider’s wallet to complete the transaction.
The design aims to improve capital efficiency by allowing a single wallet balance to support multiple active quotes. 1inch has highlighted a possible scenario where a $100,000 wallet balance could support positions totaling $300,000 in quoted liquidity, although that figure represents potential order coverage rather than actual available capital.
The difference is important because real execution depends on the funds available in the wallet when a trade is triggered. Providers with smaller balances or narrowly focused positions may encounter practical limits that are not immediately obvious from quoted amounts.
This approach contrasts with traditional AMMs, where liquidity providers deposit assets into smart contracts, transferring control of funds while facing exposure to impermanent loss as market prices fluctuate.
By allowing assets to remain in user-controlled wallets, Aqua offers a more flexible framework for professional market makers that require greater balance-sheet efficiency. However, execution still relies on matching orders with counterparties and verifying available balances on-chain at settlement.
13-Chain Expansion and Liquidity Bootstrapping
Aqua’s public launch spans Ethereum, Arbitrum, Base, BNB Chain, Optimism, Polygon, Robinhood Chain, and other EVM-compatible networks, covering 13 chains in total.
The broad deployment targets a major challenge within DeFi: liquidity remains divided among separate ecosystems. While established networks such as Ethereum and Arbitrum maintain deeper liquidity, emerging chains often struggle to attract experienced providers without additional incentives.
To encourage adoption and increase liquidity participation, 1inch is launching a rewards program backed by 10 million 1INCH tokens from the 1inch Foundation and 500,000 USDC from the 1inch DAO.
The incentives will be distributed through Merkl and managed by Degensoft Ltd (BVI). While the size of the program could attract significant participation, the long-term outcome will depend on whether it creates lasting liquidity or mainly attracts short-term capital seeking rewards.
Aqua’s broader goal is to create a more connected liquidity layer for DeFi by reducing fragmentation across chains. Whether the registry-based model can deliver sustainable improvements will depend on real-world adoption by liquidity providers and market makers over time.
