1inch opened its Aqua liquidity protocol to the public on July 28 and paired the release with a rewards program funded by 10 million 1INCH from the 1inch Foundation and 500,000 USDC from the 1inch DAO, the company said.
The program, called 1inch Network Incentives, is distributed through the incentive platform Merkl and led by Degensoft Ltd, a British Virgin Islands entity. Its purpose is to increase liquidity and swap activity across supported pairs on Aqua.
Aqua first launched for developers in November 2025 and is now live on 13 EVM chains, including Ethereum, Arbitrum, Base, BNB Chain, and Robinhood Chain.
How Aqua handles shared liquidity
1inch describes Aqua as a self-custodial shared liquidity layer. Instead of depositing tokens into pools, a liquidity provider approves a wallet balance that can back multiple positions at the same time.
When a swap order matches a position, the protocol pulls the tokens from the wallet and sends back the received assets and fees in a single atomic transaction. Until that point, the tokens remain in the provider’s wallet.
Under that setup, the same balance can support several quotes at once. 1inch gave the example of a $100,000 wallet balance backing three positions that collectively quote $300,000, while actual execution remains capped by what the wallet truly holds.
Positions on Aqua can be full range, concentrated, or pegged, and they come with no lock-ups.
“The liquidity provisioning space is broken, but you only see how broken once there’s an alternative,” 1inch co-founder Sergej Kunz said in the announcement. “With Aqua, liquidity providers no longer have to accept the inefficient pool structure they’ve put up with for years.”
1inch’s critique of pooled DEX liquidity
1inch is using the launch to argue that decentralized exchange liquidity is widely wasted under current pool-based models. According to onchain research by Dune commissioned by 1inch, 85% of concentrated liquidity across major DEXs sat underutilized in the first half of 2026.
Out of the $1.84 billion tracked, roughly $1.6 billion was not being used efficiently. The research also found that about $542 million was fully out of range in an average week, which translated into an estimated $150 million in missed fees per year.
Audits and remaining risks
1inch said Aqua has gone through eight independent audits. The firms named were OpenZeppelin, Bailsec, Hashlock, Hexens, MixBytes, Nethermind, Theori, and Decurity.
Even so, liquidity providers still carry market risk and smart-contract risk, and swap fees are not guaranteed. 1inch said the design limits exposure to the tokens actually held in the wallet. It also said single-owner positions remove the shared fee event that just-in-time liquidity bots exploit in pooled AMMs.
The bigger test comes after incentives fade
Native-token incentive programs are a standard DeFi method for bootstrapping liquidity, but they often sustain volume only while emissions continue. For Aqua, the more important test is whether its registry-based model — quoting from wallets instead of locking capital in pools — can keep providers once the 10 million 1INCH incentive pool is exhausted.
If Aqua’s capital-efficiency claims hold, professional market makers could get pool-level reach without giving up custody. That is the group 1inch needs to win away from established AMMs.