Author: 1inch

Translation: ShenChao TechFlow

ShenChao Guide: The old problem of DeFi liquidity provision is having to deposit tokens into pools, spread across different positions, and being at risk of JIT robots snatching transaction fees. 1inch Aqua allows you to support multiple market-making positions simultaneously with the same amount of money, keeping the assets in your own wallet, only transferring them at the moment of transaction, which is worth paying attention to for LPs looking to improve capital utilization while retaining custodianship.

Image: 1inch Aqua main visual—one token balance supports multiple market-making positions under self-custody. Source: 1inch

DeFi liquidity is not easy to use. Most tokens in pools are inactive most of the time. You bear the risk but do not receive the returns promised by DeFi. 1inch Aqua is aimed at solving this problem.

Now you can support multiple liquidity positions with the same token balance without depositing assets into pools; tokens remain securely in your wallet, and no transaction fees will be snatched by JIT attacks.

This means the assets can remain active across multiple markets and positions from a single balance, rather than being fragmented into piecemeal positions.

We call this method Shared Liquidity.

Last November, we released this protocol to developers. Now, 1inch Aqua is open to all users at 1inch.com/aqua.

Liquidity Issues

Most DeFi liquidity is idle most of the time. A protocol may show a high TVL, but only a portion of that liquidity is useful when actual trades happen. Liquidity may be outside of active price ranges, earning no fees while bearing market volatility risks.

Even when there are trading activities, LP's liquidity is fragmented. They have to split their limited balance across different protocols, trading pairs, and price ranges. No single position can receive the full balance support, lowering capital utilization.

Worse, tokens deposited into pools leave the LP’s wallet, meaning they lose the other uses of these tokens, and this raises all the safety and control issues after giving up custodianship.

Moreover, LP's tokens can also be attacked by JIT (Just-In-Time) robots, which can snatch away transaction fees that LP should have earned.

1inch Aqua solves all these problems.

What is 1inch Aqua

1inch Aqua is a self-custodied shared liquidity layer. It keeps your liquidity active across multiple positions while the tokens remain in your wallet.

It operates as a registry: users connect their wallets to approve a token balance, creating liquidity positions that can use this balance. The Aqua protocol tracks this balance and pulls the requested tokens from the wallet when it receives a trade order that meets the position standards, pushing back the received tokens and fees in a single atomic transaction.

In other cases, the user's funds remain in the wallet, fully controlled by the user. Tokens are not stored in Aqua or any other contract. They stay in your wallet and only move when a trader's swap position is filled.

How Aqua Works

1inch Aqua allows you to create positions by selecting trading pairs, price ranges, and swap fees. Depending on the selected trading pair and position type, positions can be full-range, concentrated, or anchored. You can open and close positions by yourself, with no lock-up periods.

Your risk exposure is limited by the actual tokens you hold, not by the theoretical total size of every position you create. If your wallet cannot cover a swap, Aqua will not call on your funds.

From today, you can create positions on 13 EVM chains, including Ethereum, Arbitrum, Base, Robinhood Chain, and BNB Chain.

Why Shared Liquidity is Important

1inch Aqua changes the way you think about liquidity provision. In the traditional model, providing liquidity often means splitting tokens between multiple pools and positions. This reduces capital utilization.

With Aqua, the same wallet balance can support multiple positions. This gives you better capital utilization and more flexibility.

This is especially important in the multi-chain DeFi market, where liquidity is spread across different venues, networks, and trade flows.

Designing for Self-Custody

1inch Aqua is built around self-custody. You do not need to deposit tokens into pools. You do not need to give up custodianship to Aqua. Your tokens stay in your wallet until the swap is completed.

Approvals are handled per token and chain and can be revoked. Your actual risk exposure remains limited by the wallet balance.

This is important because liquidity provision usually requires LPs to transfer tokens into specific pools or contracts. 1inch Aqua brings you closer to the wallet-native DeFi model: keep your own keys, hold your own tokens, choose your own positions.

Risk-Managed Liquidity

We are rapidly moving toward risk-managed and regulated DeFi. Aqua is the first risk-managed liquidity venue, where each swap is settled by verified counterparties while you maintain full self-custody of your tokens.

Why is Aqua liquidity risk-managed? Each swap is executed by verified counterparties—market makers or arbitrage bots that are verified and enforced on-chain during the swap. Thus, LPs are not exposed to unverified counterparties.

The product itself has been audited by 8 independent teams, including Hexens, OpenZeppelin, Bailsec, and Nethermind.

JIT Protection

Aqua liquidity is designed to prevent JIT fee snatching. In regular pool AMMs, JIT robots can insert liquidity before large swaps and then immediately withdraw, snatching fees that should have been earned by waiting LPs. Due to JIT attacks, LPs can lose up to 44% of their fee income. Aqua positions have only one owner, preventing JIT bots from executing this attack.

The Future of Liquidity

DeFi needs more than just more liquidity. It needs more risk-managed and usable liquidity—liquidity that can remain active where demand arises. 1inch Aqua is designed to achieve this.

Disclaimer: Aqua involves risks, including the potential loss of funds. It is built for experienced users—please do your own research. It does not constitute financial advice.

Activate your DeFi liquidity with 1inch Aqua.