1inch has introduced Aqua, a revolutionary shared-liquidity protocol that was released to developers and presented at Devconnect in Argentina. This innovative solution allows different DeFi strategies to simultaneously access the same balance while custody remains securely in the user’s wallet, potentially transforming how capital is utilized in decentralized finance.
Aqua represents a significant shift from traditional locked-deposit models by enabling atomic and delegated access to users’ balances directly from their wallets. The protocol aims to increase capital efficiency and reduce the fragmentation caused by the industry’s excessive focus on Total Value Locked (TVL).
The protocol effectively transforms each wallet into a self-custody Automated Market Maker (AMM) through an execution-by-intent and delegation model. Unlike traditional approaches, strategies don’t permanently hold funds but instead obtain temporary and atomic access to capital to execute operations before immediately returning it. This approach maintains security while dramatically improving capital efficiency.
Aqua incorporates an internal accounting system and permissions layer allowing users to specify which contracts may access their liquidity, under what conditions, and up to what cap. For developers, this removes the need to handle deposit and withdrawal logic, as applications simply query balances instead of managing funds, reducing complexity and accelerating development.
According to Anton Bukov, co-founder of 1inch, Aqua “solves liquidity fragmentation for market makers by multiplying capital efficiency.” Practical applications include the ability to use the same capital as liquidity provider, loan collateral, and for governance voting without moving funds between contracts. It also enables dynamic optimization for yield farming and arbitrage with reduced operational latency.
Security Considerations and Adoption Roadmap
While the model mitigates certain traditional risks like continuous exposure of funds in a single contract, it introduces new risk vectors related to internal accounting, permissions systems, and strategy interactions. The concept of impermanent loss—the temporary relative loss that liquidity providers can experience when prices change—may become more complex in a shared capital environment.
For retail users, Aqua promises to reduce friction and costs associated with moving funds while boosting effective Assets Under Management (AUM) without surrendering custody. Institutional entities and compliance teams will need to review governance processes, implement continuous auditing, and develop risk-segmentation mechanisms before adopting multi-strategy approaches using the same capital.
