1inch Launches ‘Aqua’ Shared Liquidity Layer for Self-Custodial DeFi

1inch has rolled out a new shared liquidity layer called ‘Aqua’, aiming to rethink how liquidity is supplied across decentralized finance (DeFi) by letting users deploy the same wallet balance across multiple positions without surrendering custody.

The 1inch Foundation said Tuesday ET that Aqua is now available to the public as a self-custodial liquidity system operating from day one across 13 EVM-compatible networks. To accelerate early activity, the Foundation is allocating 10 million 1inch (1INCH) tokens for liquidity-provider incentives, while the 1inch DAO is adding 500,000 USDC.

Aqua was first introduced to developers in November 2025, but the public launch marks 1inch’s most direct attempt yet to present an alternative to the dominant pool-based model that underpins most automated market makers (AMMs). According to 1inch, liquidity pools have become a structural bottleneck for DeFi growth and a friction point for ‘onchain’ adoption by traditional capital, largely because providers must deposit assets into protocols—handing over control—while their capital becomes fragmented across pools, pairs, and price ranges.

The core idea behind Aqua is a ledger-style approach where user funds remain in their wallet until a trade that matches their position parameters is executed. Participants connect a wallet, approve the tokens to be used, and then create liquidity positions tied to specific conditions. Aqua tracks balances and, when an eligible swap arrives, pulls the required tokens directly from the wallet, returning received tokens and fees in a single atomic transaction. If the conditions aren’t met, the tokens do not leave the wallet and user control remains intact.

“The liquidity provision market was broken, but the scale of the problem only becomes clear when an alternative appears—and today that alternative arrived,” said 1inch co-founder Sergej Kunz. He argued that the model is designed to deliver ‘useful liquidity’ where demand actually materializes, rather than simply expanding headline liquidity figures. Kunz also emphasized that Aqua is built so providers can broaden their quoting activity without giving up custody, with tokens staying in the wallet until the moment a swap is filled.

The launch coincides with a new incentive campaign dubbed the Aqua Liquidity Reward Program, led by DegenSoft and distributed via Merkl, according to 1inch. The company said the program is intended to deepen liquidity in supported pairs and expand swap activity, with campaign parameters—including eligible markets and protective mechanisms—published in the campaign configuration.

To justify the shift, 1inch pointed to an onchain analysis it commissioned from Dune. The study found that in the first half of 2026, roughly 85% of concentrated liquidity on major decentralized exchanges was underutilized—about $1.6 billion of $1.84 billion measured. On average, approximately $542 million per week sat entirely outside active price ranges, translating to an estimated $150 million in annual unrealized fee income.

Aqua’s shared liquidity approach attempts to attack this inefficiency by allowing a single wallet balance to support multiple active quotes at the same time. Under conventional models, liquidity is split across pools or multiple concentrated positions. With Aqua, the same underlying balance can back several positions simultaneously—1inch’s example suggests a $100,000 balance could quote up to $300,000 across three positions—without borrowing and without enabling trades beyond assets actually held in the wallet.

Positions can be configured as full-range, concentrated, or pegged depending on the selected pair and position type. Users can open and close positions without lockups, and the system is designed so risk exposure is capped by actual token holdings rather than the theoretical sum of all positions’ notional sizes. If a wallet cannot satisfy a swap, Aqua does not call the funds.

At launch, Aqua supports position creation across 13 EVM chains, including Ethereum, Arbitrum, Base, BNB Chain, and Robinhood Chain, according to 1inch. The interface includes a liquidity leaderboard, incentive dashboards, and a liquidity map visualization, alongside batch position creation and features such as provider profiles and sub-wallet functionality. 1inch added that AI-assisted liquidity provisioning flows via the 1inch Business MCP, as well as secure batch deployment tools, are planned for a near-term release.

On security, 1inch said Aqua has undergone eight independent audits conducted by OpenZeppelin, BailSec, Hashlock, Hexens, MixBytes, Nethermind, Theori, and Decurity. The protocol is designed to be fully self-custodial, with swaps only moving assets that exist in the provider wallet at execution time. Once an approval revocation is confirmed onchain, new fills should halt immediately. Aqua also assigns a single owner to each position, a design intended to reduce ‘JIT’ fee-sniping opportunities by eliminating shared fee moments that bots can target.

Still, 1inch stressed that self-custody and risk-limiting mechanics do not guarantee fee outcomes. Providers remain exposed to price moves that can produce impermanent loss, and they still bear market and smart-contract risks—factors that continue to shape whether new liquidity designs translate into sustainable activity beyond initial incentives.