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1inch exchange

1.inch exchange

Struggling with the calculation of your 1inch taxes?

Currently, most governments worldwide, including the IRS, have yet to issue explicit instructions on the taxation of DeFi. Consequently, many investors find themselves uncertain about the proper way to report their 1inch taxes.

Within this comprehensive guide, we will demystify the taxation of 1inch exchange transactions and how to use 1inch exchange. Additionally, we’ll provide a straightforward, three-step process to assist you in quickly and easily reporting your 1inch taxes.

What is 1inch Exchange?

1inch, operating on the Ethereum blockchain, stands as a decentralized exchange aggregator. This protocol came into existence in 2019, originating from the creative minds of Sergej Kunz and Anton Bukov during the ETHNewYork hackathon.

The fundamental goal of 1inch is to empower users to achieve cost savings by identifying the most favorable token swap rates across a variety of decentralized exchanges. This allows users to make informed decisions, comparing prices across the DeFi ecosystem and executing trades accordingly.

Connecting Your 1inch Account To ZenLedger

  • To import your transactions, log in to a 1inch exchange and copy your receiving address.
  • Paste the receiving address you copied from a 1inch exchange into the wallet address field in ZenLedger.
  • Select the proper coin from the dropdown list.
  • Select if the wallet is based in the USA or not.
  • Then hit add a coin.

How is Cryptocurrency Taxed?

In the United States, cryptocurrencies are treated as property, not currency, by the IRS for tax purposes. The tax rates for cryptocurrency transactions depend on whether they are short-term (sold within a year) or long-term (held for over a year), with short-term gains taxed at ordinary income rates and long-term gains often taxed at lower rates.

Learn more about Cryptocurrency taxes: How is Cryptocurrency Taxed?

What are the tax implications of DeFi transactions? 

Since the IRS hasn’t issued explicit guidelines on DeFi, tax experts refer to past rulings to assess the taxation of various transactions. It’s generally expected that crypto-to-crypto swaps and disposals are liable for capital gains tax, while income earned in cryptocurrency is typically subject to ordinary income tax.

Learn More about DeFi Taxes: 5 Must-Know Tips To Reduce Your DeFi Crypto Tax

How To Generate 1inch Exchange Crypto Tax Forms?

1inch does not issue tax documents to its users, placing the responsibility on you to maintain a record of your cryptocurrency tax obligations. Nevertheless, this task can become particularly challenging when you’ve executed cryptocurrency transfers between various wallets and exchanges. In such scenarios, ascertaining your cost basis and computing your capital gains can prove to be a formidable challenge.

Should you encounter difficulties while preparing your tax filings, consider utilizing crypto tax software such as ZenLedger for assistance. With this tool, you can effortlessly consolidate your transactions from all your wallets and exchanges, enabling you to complete your cryptocurrency tax returns within a matter of minutes.

Does 1inch report to the IRS? 

Currently, decentralized protocols like 1inch do not furnish IRS reports.

However, it’s essential to recognize that Ethereum blockchain transactions are publicly accessible and irreversible. Historically, the IRS has partnered with organizations like Chainalysis to scrutinize the blockchain, working to combat instances of tax-related fraud.

How To Use 1inch Exchange To Buy 1INCH Token?

1. Create An Account

Firstly, you need to create an account with an exchange that allows the trading of 1INCH tokens. 1INCH tokens can be availed from several exchanges, but the bad news is that they won’t sell them for fiat currency. Thus it is important to have other cryptos for purchasing 1INCH tokens.

It is recommended to choose an exchange based on liquidity and ease of use.

2. Add Your Wallet

To keep swapping tokens on your own, it is recommended to connect your account with an Ethereum wallet. You can choose from a wide range of cryptocurrency wallets that are available on the market.

3. Stake Order

Once you’ve created an account and connected your wallet, go to ‘DAO’ and then click on ‘governance’. Now you can enter the amount of 1INCH that you would like to stake and finally unlock your token using the ‘unlock’ or ‘infinity unlock’ as per your choice.

Advantages Of 1inch Exchange

The 1inch liquidity protocol offers many benefits to its users and liquidity providers:

  • Create free-limit orders
  • Earn interest by lending crypto and supplying liquidity to liquidity pools
  • Earn governance rewards consisting of the swap fee and the price impact fee
  • Employ self-executing smart contracts to match and carry out transactions between buyers and sellers using the non-custodial infrastructure

The Bottom Line: Why Choose 1inch Exchange?

1inch’s future will depend on the future of decentralized finance. What set’s 1inch apart from others is that 1inch helps you find the most inexpensive trading option from all exchanges and facilitates trade using liquidity protocols.

Some other reasons for choosing 1inch liquidity protocol are:

  • No security breaches or hacks
  • User-friendly interface
  • No deposit, trading, or withdrawal fees
  • Ensures high liquidity and premium rates by aggregating DEX order books
  • CHI Gas Tokens can lower transaction costs even further
  • Allows for yield farming

1inch Exchange FAQs

1. What is 1inch?

1inch is a decentralized exchange aggregator. This means that 1inch analyzes various decentralized exchanges for the best prices rather than working as an exchange. This allows traders to compare and get them for the cheapest price in the market. Using 1inch exchange users can determine the price impact fee, fee for swapping liquidity protocol, and governance reward.

2. What exchanges is 1inch on?

Many crypto exchanges support 1INCH tokens. Among them, Binance is the biggest platform for trading 1INCH for BTC. Apart from that, the 1inch exchange is the largest platform for Tether trading.

3. Is 1INCH crypto a good investment?

Keeping the growth of today’s DeFi sector, 1INCH can be a rewarding investment. Since its inception, 1INCH’s token valuation in the market cap is constantly rising. As of July 2021, it has millions of users and trades about $250 million a day.