1inch has launched Aqua, a liquidity protocol that uses a registry-based model instead of traditional AMM pools. The protocol is now live across 13 EVM-compatible chains, including Ethereum, Arbitrum, Base, BNB Chain, Optimism, Polygon, and Robinhood Chain. Aqua lets liquidity providers register a wallet balance as backing for multiple quoted positions without transferring assets out of their wallet, reducing custody risk.
How the registry model works
Aqua doesn't ask LPs to deposit tokens into a smart contract. Instead, they register an existing wallet balance as collateral for quoted positions. That means no custody transfer and no impermanent loss — two pain points of standard AMMs. The quoted inventory can exceed the actual wallet balance. For example, a $100,000 wallet could back $300,000 in quotes. But fill capacity is limited by the on-chain balance at execution time. So if a trader tries to buy more than the wallet holds, the order won't fully fill.
Incentives from the DAO
1inch has allocated 10 million 1INCH tokens and 500,000 USDC from the DAO to attract liquidity providers. The incentives are distributed via Merkl over three months. BNB Chain is the first co-incentive partner for the launch, meaning it's chipping in additional rewards for LPs on its chain. The three-month window gives the protocol time to prove its model works at scale.
For liquidity providers, the appeal is clear: keep your assets in your own wallet, earn incentives, and avoid the custody risk that comes with depositing into a pool. The trade-off is that over-quoting can lead to partial fills, which might frustrate some traders. But for LPs who want to deploy idle balances across multiple chains without moving funds, Aqua offers a new option. The protocol covers 13 chains simultaneously, addressing DeFi's fragmented liquidity problem in one go.
Next steps
The three-month incentive period is now live. Whether other chains join BNB Chain as co-incentive partners could determine how quickly Aqua gains traction. For now, 1inch is betting that a no-custody, no-impermanent-loss model will pull liquidity away from traditional AMMs.
