1inch Aqua protocol targets idle liquidity in tokenized assets
Decentralized exchange 1inch has launched a shared liquidity protocol called Aqua to address the $1.6 billion of idle capital constraining the tokenized asset market.
Decentralized exchange operator 1inch has launched Aqua, a shared liquidity protocol designed to fix capital inefficiencies in the tokenized asset market. The protocol moves away from traditional two-token pairs, allowing users to trade assets like tokenized equities directly against each other rather than through a dollar intermediary.
A study commissioned by 1inch found that 80% of liquidity on decentralized exchanges sits idle at any given time. This equates to roughly $1.6 billion in capital that is not earning yield. For newer, thinner markets such as tokenized real-world assets (RWAs), this capital inefficiency can be fatal to trading viability.
Sergej Kunz, co-founder and CEO of 1inch, said the new infrastructure is necessary to support the ongoing influx of real-world assets into decentralized finance. "RWAs are coming into DeFi, and RWAs need our infrastructure to be able to have proper liquidity in our space," he said.
Aqua enables a network where a single pool of capital can back multiple trading pairs simultaneously, with liquidity providers collecting fees on every transaction. Kunz highlighted tokenized equities as a primary application for this model. Platforms like Robinhood, Kraken, Ondo, and Backed's xStocks already offer hundreds of tokenized stocks to non-U.S. investors.
This architecture allows for direct asset-to-asset trading rather than routing through fiat. "You could, theoretically, set up a trading pair for SpaceX and Apple stock. And then you have SpaceX–Tesla, and then Tesla–Apple, and then Microsoft. It's a construct that allows you to benefit from the volume that comes from the movement of the RWAs," Kunz said.
Traditional brokerages largely restrict users to trading each stock against dollars. Kunz notes that when tokenized real-world assets are "isolated in single two-token-pair pools, it's not possible" to achieve this scale of efficiency. Aqua’s shared-pool approach represents a structural shift, offering tokenized equities a native decentralized finance trading mechanism.
