1inch has routed $815 billion in trading volume and has 27 million users, and yet institutional capital is still sitting on the sidelines of decentralised finance. The problem is not the technology, it is the infrastructure and the trust underneath it. And this week maybe showed why that matters, with Binance reporting a security incident affecting about $6.3 billion. Joining me is Holly Atkinson, Chief Product and Technology Officer at 1inch. Holly, welcome to the show.
Hi.
First, how much does an event like this, which made the headlines today of course, shake institutional confidence in crypto in general?
Of course, this kind of incident, especially at this scale, does rattle the industry and everybody participating in it. From my perspective, it of course isn’t the first incident like this that we have seen. And ultimately the industry...
Well, the number is bigger this time.
It is. Yes. Substantially bigger. But like before, I believe the industry is going to bounce back. The trend is that institutions and users are coming on chain. And I think there is an understanding now that there is a difference between the utility of the digital assets and the operational infrastructure and systems around them, especially human error. So for me, that part will become more robust. And ultimately we will still see this trend of users moving on chain.
As we mentioned before, Tether and Circle froze billions in stolen stablecoins within hours of this happening. Does that show crypto can be policed, or how centralised it still is?
It certainly does, and it is like that by design. At the moment we have this hybrid approach where, especially with stablecoin issuers, there is a level of centralisation. You also have protocols such as 1inch that are open, and the protocols stay neutral. So we have this balance of centralisation and openness that cannot really be controlled in that way. With 1inch, we did what we could to manage our side of things in terms of user funds that were affected. But I see that this hybrid model will continue.
1inch research found about 85% of concentrated DeFi liquidity was underutilised in the first half of this year. Is that the biggest problem holding DeFi back?
It is certainly a huge problem in DeFi. For liquidity providers, this idea that their capital is underutilised means they are not earning as much as they could be on the capital that is sitting in protocols. What we are doing with 1inch Aqua is changing the model for DeFi liquidity to fix some of those problems. But certainly the scale of the issue is big.
1inch launched Aqua in July. In plain terms, what problem does it solve?
Aqua has been designed differently from your typical DeFi model. For the idle liquidity issue that we are seeing, Aqua lets users allocate their funds across multiple strategies at any one time, increasing the chance to earn fees. It also tackles the problem of custody of funds, which is so relevant with today’s incident as well. Funds stay with the users while they are allocated in those strategies. And of course that feeds into the issue of fragmentation as well. So, multiple problems.
After what we have seen this week, does self custody matter more to institutions?
As I mentioned, I think we will continue to see a hybrid approach around custody for some time. There is a core of users that are very focused on self custody at the moment, especially crypto native users, those already familiar with how it all works. But we also see that centralisation gives some benefits around moving quickly when there are incidents, and it allows some central control, as we have seen.
What about AI? How will AI agents change the way money moves on chain?
It is a very good question. I think with AI we are going to see a complete change. We are going to see continuous use of on-chain strategies. We are going to see agents managing users’ funds almost autonomously. Through MCP, we provide MCP now for our API offering, and we are going to see a 24/7 approach.
Faster, definitely. Where does DeFi go from here, niche infrastructure or mainstream finance?
I believe the general trend is that it is becoming more and more mainstream. We are seeing institutions move on chain. But ultimately, like with the internet, where you do not see the underlying protocols behind the internet, we want users to just have a great user experience regardless of the technology. Whether blockchain and crypto infrastructure is underpinning the user experience or not, I think it will be a hybrid. And what is important is the user experience overall.
And security, I would say.
Security.
Tokenised real world assets are growing fast. What has to be true for institutions to trust them on chain?
What we are seeing is that institutions are trusting the technology and moving on chain already. RWA.xyz put out their October figure: 39 billion of tokenised assets, excluding stablecoins, on chain, which is a huge amount, and 1inch has routed a substantial figure as well. So the trend we are seeing is that there is trust. Of course there will be ups and downs with this industry, but the trend will continue.
Thank you so much, Holly, for being here with us today.
Thank you for having me.
