DeFi’s Unused Liquidity Problem

DeFi has spent years refining AMM curves, fee mechanisms and routing logic, yet one core issue remains unresolved: most liquidity in automated market makers remains idle. Capital is spread thin across countless pools and protocols, leaving the majority of deposited funds underutilized. At Devconnect Buenos Aires, 1inch introduced Aqua, a protocol built to challenge this inefficiency at its root by allowing a single wallet balance to power multiple liquidity strategies simultaneously through a shared-liquidity architecture.

Why the Launch Happened at Devconnect

Sergej Kunz explains that Devconnect brings together a deeply technical crowd capable of evaluating, stress-testing and improving an infrastructure-level protocol. Aqua is not a marketing product but a foundational component intended for builders, and the event provides the right environment for rigorous examination and collaboration.

What Aqua Is and Why It Matters

Aqua directly targets the reality that up to 90% of liquidity in AMMs sits unused. Instead of requiring users to lock assets into isolated pools, Aqua keeps the assets in the wallet, enabling them to participate in multiple AIMM strategies simultaneously. It functions like a virtual DEX engine inside the user’s wallet, while remaining entirely self-custodial. This approach removes the long-standing fragmentation problem that forces liquidity providers to split capital across pools.

How Aqua Improves Capital Efficiency

Traditional AMMs dilute liquidity by having LPs divide assets across several trading pairs. Aqua reverses this dynamic: the full balance of an asset becomes available for multiple strategies at once. According to Kunz, internal testing shows yields increasing up to five times, and shared liquidity can boost efficiency up to fifteen times compared to legacy AMM designs. This turns Aqua from a theoretical improvement into a direct earnings upgrade for LPs.

Who Aqua Is Built For

The initial release targets developers, researchers and security experts who will test, probe and refine the protocol. Once the production version goes live, Aqua will be aimed at liquidity providers who want higher returns without spreading capital across numerous pools.

Reaction at Devconnect

The protocol attracted strong interest from highly technical attendees, many of whom expressed surprise that shared-liquidity architecture had not been implemented earlier. Their feedback is already shaping how the 1inch team communicates Aqua’s mechanics and benefits.

Whether Anything Comparable Exists

Kunz states that Aqua represents a new architectural direction for DeFi. In 2019, 1inch solved fragmentation for traders through aggregation; Aqua does the same for liquidity providers. While some teams explored related ideas, no existing product offers a functioning shared-liquidity system with such minimal integration overhead—developers can use it with only a few lines of code.

What to Expect from 1inch Going Into 2026

The company has rolled out Solana support for intent-based swaps, introduced cross-chain functionality and rebranded to better represent its broader scope that includes traditional businesses. Aqua’s production release is planned for late this year or early next year, accompanied by a dedicated interface and third-party integrations. Additional protocols are also in development.

Key Takeaway from Devconnect

Kunz emphasizes that DeFi projects often view each other as competitors, but in reality they build complementary pieces of the same infrastructure. Some teams feared Aqua might disrupt their work, yet his message is that the ecosystem is stronger when foundational problems are solved collaboratively. A unified infrastructure benefits not only Web3 natives but also the traditional industries that will eventually rely on it.