In a significant move for the decentralized finance (DeFi) sector, 1inch Network has successfully closed a $175 million Series B funding round. The project's co-founder, Sergej Kunz, has stated that the capital will be used to develop services tailored for institutional clients, including banks and hedge funds.
This latest investment far exceeded initial targets. Reports indicate that just three months prior, 1inch had planned to raise a minimum of $70 million. However, strong investor interest prompted the team to increase their goal, culminating in this substantial raise.
Key Investors and Token Details
The funding round was led by Amber Group, a prominent global crypto finance firm. It saw participation from a prestigious list of institutional trading firms and investment funds, including Jane Street, VanEck, Alameda Research, Celsius, Nexo, and the Gemini Frontier Fund.
A key aspect of this round was the method of fundraising. 1inch sold its native 1INCH tokens at a discounted price of $1.50 per token to these strategic investors. At the time of the announcement, the public market price was approximately $3.60. The team clarified that this discount was intentionally offered to attract visionary, long-term partners who could aid in scaling the network's operations and adoption.
This Series B brings the total amount of capital raised by 1inch Network to nearly $190 million, following two earlier rounds that secured $14.8 million.
Strategic Focus on Institutional Products
A primary directive for the use of these new funds is a strategic pivot towards serving institutional entities. Sergej Kunz emphasized that the project is actively pursuing the necessary regulatory approvals in key markets to make this a reality.
Navigating the Regulatory Landscape
Europe is the first target region for this expansion. The team is currently exploring available regulatory frameworks and licensing opportunities in several European jurisdictions, specifically naming Germany, Gibraltar, and Liechtenstein as areas of focus. While the exact type of licensing required is still under consultation with legal experts, the goal is to establish a fully compliant operational foundation.
The United States is also a key market in their long-term strategy, though its complex regulatory environment presents a separate set of challenges to address after establishing a European foothold.
Introducing 1inch Pro
Central to this institutional strategy is the development of 1inch Pro, a dedicated product suite first disclosed in September. This platform is being designed explicitly for professional and institutional users, offering access to curated liquidity sources and services.
To comply with regulatory standards, 1inch has already implemented geofencing measures, restricting access for users with U.S. IP addresses. The 1inch Pro product will further this by implementing "permissioned pools." These pools will be accessible only to verified participants, requiring all users, including retail, to pass Know Your Customer (KYC) and Anti-Money Laundering (AML) checks to interact with the services offered.
The anticipated launch window for 1inch Pro is late 2022 or early 2023.
New Protocol and Token Utility
Beyond the Pro platform, 1inch Network is also developing a new protocol slated for release in the first quarter of 2022. This protocol is designed to enhance the utility of the 1INCH token by positioning it as an "insurance token."
Users will be able to stake their 1INCH tokens to provide a backstop for potential protocol losses. In return for assuming this risk, stakers will earn rewards from the protocol's fee revenue, creating a new yield-generating mechanism directly tied to the network's health and security. 👉 Explore more strategies for DeFi staking
Frequently Asked Questions
What is the 1inch Network?
1inch is a leading DeFi aggregator that sources liquidity from various decentralized exchanges (DEXs) to provide users with the best possible swap rates and lower transaction fees. It simplifies the process of finding efficient token swap routes across the entire DeFi ecosystem.
What is the goal of the $175 million funding?
The primary goal is to expand 1inch's services into the institutional market. The funds will be used to develop new, compliant products like 1inch Pro, secure necessary operational licenses in key regions like Europe, and further develop the protocol's technology and tokenomics.
How can institutions use 1inch Pro?
1inch Pro will offer institutions permissioned access to deep liquidity pools on a regulated platform. Features will likely include advanced trading tools, larger transaction capabilities, and a compliant environment with enforced KYC/AML procedures, making it suitable for banks and funds.
What does the new 'insurance token' model mean for 1INCH holders?
It introduces a new staking mechanism. Holders can stake their tokens to act as a insurance fund for the protocol. If the protocol suffers a financial loss (e.g., from a smart contract exploit), the staked tokens could be used to cover it. In exchange, stakers earn fees from protocol operations.
When will retail users have access to 1inch Pro?
Retail users will not be excluded but will be required to complete identity verification (KYC) to access the specific liquidity sources and services offered within the 1inch Pro product environment. The main 1inch aggregator will remain available to all users.
Why was the token sold at a discount to investors?
The discount was a strategic decision to attract long-term, strategic partners like Amber Group and Jane Street. These entities bring more than just capital; they provide expertise, market reach, and credibility that can help 1inch scale its operations and achieve its institutional goals more effectively.