Aqua Tackles DeFi's Fragmented Liquidity with Registry-Based Model

1inch has launched its Aqua liquidity protocol to address DeFi's fragmented liquidity issue. The public release covers 13 EVM-compatible networks, including Ethereum, Arbitrum, Base, and Polygon. This allows liquidity providers to support multiple simultaneous quoted positions without transferring assets from their wallets.

Aqua uses a registry-based allowance model instead of conventional pool deposits. Providers register a wallet balance as backing, which can support multiple quoted positions. A swap executes only when it matches the position's stated terms, and the protocol pulls the required assets directly from the provider's wallet.

The capital efficiency implication is significant, with 1inch citing a scenario where a $100,000 wallet balance backs positions quoting a combined $300,000. However, this figure reflects quoted inventory, not available capital, which is still constrained by the wallet's actual holdings at execution time.