Reimagining the AMM with 1inch Aqua
summary
Aqua keeps liquidity in the LP’s wallet and settles swaps atomically by verifying commitments on-chain: an LP gives an approval then calls a ship function, an indexer emits the commitment, a trader pulls a quote and the router reaches into the LP wallet to move tokens. Architecture is a simple 80-line contract router, separate Aqua apps for curves (constant product, concentrated, stable) and strategy bookkeeping. A local VM called SwapVM exposes building-block op codes for price curves, taker rules and fees, letting $4,000 of wallet liquidity become $4,000 into $6,000 effective liquidity across strategies; previous hackathons show prediction markets and flash loans work, and there are $5,000 bounties for new Aqua apps.
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chapters (39)
- 0:00Introduction
- 0:11What the Talk Will Cover
- 0:44The Classic LP Example With Bob
- 1:24How a Trader Swaps Against the Pool
- 1:41Why the Ecosystem Gets Fragmented
- 1:52How 1inch Solved the Trader Side
- 2:33Why Fragmentation Only Accelerated
- 2:51LP Drawback: Choosing Where to Deposit
- 3:09The High Opportunity Cost of Participation
- 3:28Losing Access to Governance
- 3:50Why Moving Funds Is High Friction
- 4:24How New Projects Incentivize Fragmentation
- 4:50The Problem With Funds in the Middle
- 5:13The Question Behind Aqua
- 5:36How Liquidity Stays in the LP Wallet
- 6:11The Three Parts of Aqua's Architecture
- 6:21The Aqua Router
- 7:07Aqua Applications
- 7:27Aqua Strategies
- 7:50Walking Through the On-Chain Flow
- 8:46How the Commitment Is Indexed
- 9:04How a Trader Pulls From Bob's Wallet
- 10:19Reusing Tokens Across Strategies
- 10:40Turning $4,000 Into $6,000 of Liquidity
- 11:31Handling Pressure on the Same LP
- 12:10Beyond Constant Product: Introducing SwapVM
- 12:58SwapVM as Building Blocks for Swaps
- 13:35Solidity vs SwapVM Side by Side
- 14:56Aqua Extends Beyond AMMs
- 15:50A Flash Loan Example in Aqua
- 16:31Participating in Many Strategies at Once
- 17:12The Impact on the DeFi Market
- 17:50The Aqua Bounties
- 18:10Q&A: Virtual Balances
- 19:31Q&A: Using Custom Op Codes
- 20:42Q&A: SwapVM as a Solidity Interpreter
- 21:14Q&A: Liquidity Ranges
- 22:06Q&A: EOA vs Contract LPs
- 22:20Closing
