1inch (@1inch): Shared liquidity, explained: how one wallet balance can back multiple LP positions

Shared liquidity, explained: how one wallet balance can back multiple LP positions Shared liquidity, explained: how one wallet balance can back multiple LP positions Providing liquidity in DeFi has always started with a deposit. You pick a pool, send your tokens into a contract and hope the trading volume shows up where you parked them. If it doesn't, your capital sits there anyway. 1inch Aqua launched this week with a different starting point. The model is called shared liquidity: one wallet balance backs multiple liquidity positions at once, and your tokens stay in your wallet until a swap actually uses them. Here's how it works and what it changes. Why pool deposits hold LPs back AMMs made permissionless market-making possible: deposit tokens into a pool, traders swap against it, you collect fees. The trade-off is rigidity. Each deposit is tied to one pool, one pair and one price range. Want to cover several markets? You split your balance into pieces and commit each piece in advance, before you know where demand lands. Some positions see heavy trading. Others sit untouched. A protocol can report high TVL while only a fraction of that capital supports actual trades. The result is fragmentation: capital spread thin, locked in place and often idle. What shared liquidity is Shared liquidity, pioneered by 1inch Aqua, lets the same token balance supportons simultaneously, without depositing assets into a pool. Instead of transferring tokens into pool contracts, you approve your wallet baion. Multiple positions can reference that same approved balance. The assetsstay in your wallet until one of those positions fills a swap. That reverses a core assumption of DeFi market-making. You no longer decide in advance exactly where your capital should sit. One balance stays available across several opportunities at the same time. How it works, step by step 1. You approve your wallet balance for liquidity provision. No tokens move. 2. You create positions on top of it: token pair, price range, fee settings. Positions define trading terms, they don't hold the tokens. 3. A swap matches one of your positions: the trader's input tokens land in youokens go to the trader, atomically, wallet to wallet. 4. No swap, no movement: nothing leaves your wallet, and the approval can be updated or revoked. What actually changes Better capital utilization comes first. In pool-based LPing one balance ends up fragmented across positions, each backed by only part of your capital regardless of where demand appears. With shared liquidity the full balance stays available to every positity can cover more markets without being pre-split. Self-custody is the second shift. In traditional pools your tokens leave the wontract. Here settlement happens wallet to wallet at the moment of the swap,and until that moment you hold your assets. For many LPs this feels closer to the wallet-native experience that brought them to DeFi in the first place. For developers, the same model opens the door to liquidity infrastructure that doesn't depend on an isolated pool for every new application. The JIT problem gets smaller Pooled liquidity exposes LPs to more than inefficiency. Just-in-time bots add liquidity right before a large swap and pull it out right after, capturing fees that would otherwise go to long-term LPs. Research estimates JIT attacks can cut LP fee income by as much as 44%. Shared liquidity positions aren't pool deposits, which shrinks the surface for this kind of fee sniping. In 1inch Aqua, JIT is substantially reduced by design. Shared liquidity positions aren't pool deposits, which shrinks the surface for In 1inch Aqua, JIT is substantially reduced by design. Where this goes DeFi is moving past measuring liquidity by how much capital is locked. The quemuch of that capital actually works when demand appears. Shared liquidity isone answer: a single balance available across several positions, with self-custody intact. Aqua is the first protocol built around the model. As with any form of liquidity provision, positions remain exposed to market risk and fees are not guaranteed. What bites harder for you as an LP right now – fragmented capital or JIT fee sniping? Explore 1inch Aqua and discover how shared liquidity is reshaping DeFi liquidity provision. Disclaimer: This content is provided for informational purposes only. Nothing in this material constitutes financial, investment, legal, or tax advice, or a recommendation to enter into any transaction. Interacting with Aqua involves risk, including the possible loss of all funds involved.