1inch team deploys Mooniswap automated market-maker algorithm

The developers of 1inch, a liquidity aggregator across decentralized exchanges (DEXs), have integrated into it their own automated market maker (AMM) algorithm called Mooniswap.

We are thrilled to announce the next generation AMM protocol #Mooniswap powered by @1inchExchange! 🦄🚀🌈🥳https://t.co/n2soc00F8k #DeFi #1inch

— Mooniswap (@mooniswap) August 10, 2020

1inch users can rely on liquidity from platforms such as Balancer, Bancor, Kyber Network and Uniswap, including its second version of the protocol.

The AMM operates by continuously maintaining a quantity known as the Constant Product, which depends on the liquidity of both assets in the pool. Through an AMM, users can easily and quickly swap tokens, bypassing custodial solutions of centralized exchanges.

A more detailed description of the mechanism is in the Russian-language book \”How This DeFi Works\”.

CoinGecko published a book on DeFi in Russian

Initially the AMM was implemented in Bancor; subsequently the algorithm was adopted by Uniswap and Balancer, and now by 1inch.

According to 1inch developers, the first AMMs were not without flaws and, for example, led to \”large slippage in large trades\”. This spurred improvements in later versions from Curve and Balancer. 1inch expects Mooniswap to meet the highest standards.

The developers plan to reduce arbitrage profits by introducing a five-minute delay in price determination. With this approach, market makers will be forced to execute trades at less favorable prices. This will add value for liquidity providers. Arbitrageurs will receive only a portion of the slippage, the rest will be redirected to the overall pool of liquidity providers.

1inch believes that their proposed AMM model will bring liquidity providers 50-200% more income than Uniswap v2.

Mooniswap builds on one of Vitalik Buterin’s ideas first put forward in 2016.

Referenced your article in the whitepaper https://t.co/x2DYhzJqNm

Interesting fact: we came up to the same approach trying to solve different issue, so we got front-running protection for free since you proposed same approach for anti-fron-running. Anyway your idea is great!

— Anton Bukov | k06a.eth (@k06a) August 11, 2020

As Messari notes, a fifth of the total trading volume on non-custodial Ethereum exchanges is attributed to the so-called DeFi aggregators. In July the total trading volume on DEX stood at more than $4.3 billion.

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