Decentralized finance has an accounting problem, and the company running one of its biggest trade routers is happy to say it out loud. By 1inch’s own account, over $800 billion worth of token swaps have run through its contracts since a hackathon in 2019. The firm behind them has never made a profit, and its co-founder says it’s the right outcome for now.
“We were never profitable, I would say,” Sergej Kunz, 1inch’s co-founder, said on the On The Margin podcast. “We were lucky that we got funded by a lot of backers and are still capable to just focus on building instead of trying to extract value.”
Kunz spoke on July 28, the day 1inch launched Aqua publicly (its shared-liquidity protocol) across 13 blockchains. Halfway through the conversation, he opened up a dashboard and read out the lifetime volume: $809 billion. Third-party trackers count less, because they start their tallies later and measure different criteria, while the company’s milestone announcements put its all-chain total at $700 billion as of July 2025. The fees have not followed the flow.
“Right now like it’s time to build, you know, like the market is too small to extract value, you know,” Kunz said. “I see all these projects trying to make huge amount of revenue, and then a user got bad results.”
1inch doesn’t run an exchange, instead it routes a trade across other user exchanges to find the best price, and a growing share of that routing now happens within mainstream apps. Coinbase said in October that it would use the 1inch API for non-custodial swaps in its app. Robinhood made 1inch a launch partner for ‘Robinhood Chain’, the Arbitrum-based network it built in July for tokenized stocks and ETFs. Kunz is relaxed about the distributors being the ones with a business model: they know how to make money, he said, and they bring their customers onto his rails.
His argument is that the money DeFi does make is coming from the wrong place. Automated market makers pay liquidity providers a slice of fees, and the protocols that govern those pools have started taking a cut of their own.
“LPs are not profitable at the end and the whole space get damaged,” Kunz said.
Research by Dune, commissioned by 1inch, found that 85% of concentrated liquidity across the major decentralized exchanges was underutilized in the first half of 2026: about $1.6 billion of the $1.84 billion tracked. Around $542 million sat fully out of range in an average week, with an estimated $150 million a year in fees going uncollected.
Aqua is built to attack that number. Instead of depositing tokens into a pool, a provider keeps them in a wallet and lets a single balance stand behind many trading pairs at once. Trades are settled by market makers who have cleared 1inch’s compliance checks, and the sub-wallet holding the positions is a Safe multisig.
“I personally have right now more than one hundred pairs in my position,” Kunz said.
Some of those pairs are not crypto at all.
“So I have for example SpaceX to NVIDIA stock and NVIDIA to Apple, Apple to SpaceX,” he said, using tokenized shares of the kind that have already raised questions about who actually owns the underlying stock. Tokenized equities move on their own news rather than in lockstep with bitcoin, he argued, and that independent movement is what generates fees for whoever supplies the liquidity between them.
Aqua had about $25 million committed on its first day, by his count, after eight security audits, with 10 million 1INCH tokens and 500,000 USDC set aside as incentives.
The fragmentation Aqua is chasing is a complaint across the sector, not a 1inch discovery.
“Right now, everyone uses multiple DeFi applications, but the capital is immediately fragmented,” MacBrennan Peet, the founder of DeFi prime broker Project 0, said on the On The Margin podcast, in a conversation that fed an earlier piece on DeFi’s retail civil war.
Other founders read the same unprofitability and draw the opposite lesson.
“Their teams operate like highly well-run FinTech companies and they have basically B2B sales teams,” Will Harborne, the chief executive of Rhino.fi, said on the On The Margin podcast, describing the DeFi protocols that are still growing. “And the ones that didn’t lean into that are suffering, are shrinking, and not managing to kind of adapt.”
Kunz’s answer is that he would rather build the rails now and charge once traditional finance is running on them. That is also why the parts of 1inch he is proudest of cannot be changed by anyone, including him.
“It’s kind of written in stone, it cannot be changed,” he said of the swap contracts. “There are no admins.”
Building has gotten cheaper in the meantime. 1inch has about 140 people worldwide, Kunz said, on enterprise contracts with Cursor and with the large model providers. Its engineers now hand routine server fixes to AI agents, with a human left to review the result before it is merged.
He does not think that protects incumbents like his own company.
“In two weeks you can build something like what we have,” he said, which leaves community and partnerships as the moat that remains.
That is roughly how 1inch started. Kunz was a software engineer at Porsche in 2019, building on weekends with co-founder Anton Bukov.
“We were participating in seventeen hackathons around the globe,” he said, “in like thirteen months. And only one thing that we have built got adoption.”
The one that stuck, assembled at a New York hackathon in May 2019 to stitch together Uniswap, Kyber and Bancor, did not win.
“Actually we didn’t win anything on a hackathon, except like three hundred bucks from ENS,” Kunz said. “I was able to pay my ticket back to Germany.”
Two weeks later, his co-founder called to say people were using it.
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