#USA #British Virgin Islands #DeFi #1inch #AQUA

1inch Introduces Aqua to the DeFi Landscape

On July 28, 2026, 1inch, a leading player in the decentralized finance (DeFi) ecosystem, officially unveiled Aqua, a pioneering shared liquidity layer designed to transform how liquidity providers manage their assets. With its unique self-custodial approach, Aqua enables users to utilize their wallet balances across various positions without the need to lock assets in traditional liquidity pools, thus offering a risk-controlled alternative to the standard pool-based model.

A Shift in Liquidity Management

The launch of Aqua follows a successful developer rollout in November 2025, where user feedback helped shape the final product. According to Sergej Kunz, co-founder of 1inch, the existing liquidity provisioning systems have significant flaws that only become apparent when a viable alternative is introduced. He remarked,

"The liquidity provisioning space is broken, but you only see how broken once there's an alternative. Today, that alternative has arrived."

Aqua empowers liquidity providers to maintain control over their assets while still participating in markets. By connecting their wallets to the Aqua protocol, users can approve token balances and create liquidity positions accordingly. This system allows Aqua to track user balances and execute swaps seamlessly, ensuring that funds remain under the provider's control.

How Aqua Works

Aqua differentiates itself by functioning as a registry where users can create liquidity positions backed by their available token balances. When a swap request meets the position’s criteria, Aqua manages the transaction by pulling the necessary tokens from the user's wallet and completing the swap in a single atomic operation. This means that as long as a swap is not filled, the user’s tokens stay safe within their wallet.

For liquidity providers, this method is not just about convenience; it fundamentally changes the way liquidity is utilized. Instead of partitioning assets across multiple pools, a single balance can fortify multiple liquidity positions. For instance, a user with a $100,000 balance could provide liquidity that effectively accounts for up to $300,000 across three different positions.

Innovative Liquidity Reward Programs

To accelerate adoption and reward early liquidity providers, the Aqua launch includes a liquidity incentives program funded with $10 million in 1INCH tokens from the 1inch Foundation and $500,000 in USDC from the 1inch DAO. Delivered through collaborations with Degensoft Ltd. and utilizing the Merkl infrastructure, this initiative aims to stimulate liquidity growth and increase swap activity, thereby enhancing the user experience on the platform.

The Need for Change in DeFi

1inch has identified challenges within the current pool-based liquidity model, which limits the scalability of DeFi while deterring traditional financial institutions (TradFi) from adopting blockchain solutions. Research conducted by Dune for 1inch illustrates the severity of the issue: in the first half of 2026, approximately 85% of concentrated liquidity on major decentralized exchanges (DEXs) went underutilized, equating to an estimated $150 million in lost potential revenues annually.

Aqua's structure allows liquidity to be deployed more efficiently, ensuring that a single wallet balance can actively participate in various market demands without sacrificing liquidity or ownership. Users have the flexibility to create full-range, concentrated, or pegged positions according to their strategies, all without the typical constraints of traditional models.

A Robust Security Framework

In addition to its innovative liquidity features, Aqua emphasizes security through comprehensive measures. The platform has undergone eight independent security audits from notable organizations such as OpenZeppelin and Hashlock. Aqua’s entirely self-custodial design ensures that only the tokens in a user’s wallet can be utilized for swaps, preserving user autonomy and minimizing risks associated with loss of control over assets. Moreover, with features designed to counteract market manipulation such as fee sniping, Aqua showcases its commitment to a secure user experience.

Future Developments and Cross-Chain Functions

Starting its journey on July 28th, Aqua supports liquidity position creation across 13 Ethereum Virtual Machine (EVM) compatible chains, including Ethereum, Arbitrum, and BNB Chain. Furthermore, it boasts several new functions and visualizations designed to enhance usability and position management, including a liquidity leaderboard, batch position creation, and an AI-assisted approach to liquidity provisioning through the upcoming 1inch Business MCP.

Aqua positions 1inch at the forefront of DeFi innovation, promising a seamless experience that merges efficiency, security, and user control. As DeFi continues to evolve, Aqua offers a solution that not only meets the current demands of liquidity providers but also sets the stage for a more accessible and functional decentralized finance landscape.