Sergej Kunz is a software developer and co-founder of 1inch, a DEX aggregator designed to optimize trades across various DEXes.

Career

Kunz developed an early interest in computers when he received his first computer at a young age. He learned to disassemble and reassemble it, which led him to pursue an education in computer systems. Due to limited internet access, he delved into programming, leveraging library resources to teach himself. ^[1]

By age 17, Kunz had acquired enough programming skills to secure freelance web development projects. After secondary school, he pursued a career in programming while continuing his education in the field. He also developed a text message aggregation system, laying the groundwork for his first venture, launched in 2014 alongside his full-time employment. ^[1]

Transitioning through roles at companies like Commerce Connector and Herzog, he developed his coding abilities in various domains, including PHP and front-end development. From 2015 to 2019, he undertook consultancy projects for major clients like Bosch, Siemens, and Porsche, eventually securing a full-time position at Porsche, initially in DevOps, before shifting towards cybersecurity. ^[1]

Despite initial encounters with crypto in 2012 through mining, he delved deeper into crypto by transitioning to Ethereum mining until early 2018, captivated by blockchain technology's potential. He shared his expertise through his YouTube channel, CryptoManiacs, conducting live security audits of smart contracts. During one session, he connected with Anton Bukov, his future co-founder at 1inch, who collaborated as co-hosts on the channel for six months. Their partnership grew through participation in various hackathons, including one in Singapore, where they won a prize. This success continued with subsequent hackathons, earning recognition from Ethereum Global with two major awards. ^[1]

1inch

In May 2019, Kunz and Bukov created a decentralized exchange (DEX) aggregator at a hackathon in New York City during a 60-hour coding marathon. Originally, their concept aimed to provide users with crypto price information from various sources to secure the best rates. However, inspired by Kunz's prior development of an arbitrage bot, they pivoted to the idea of a DEX aggregator that splits transactions across multiple exchanges, offering users superior rates. While their solution only received a minor award at the hackathon, it laid the groundwork for the 1inch Network. ^[1]

Kunz and Bukov co-founded 1inch in September 2020. In an interview for Bankless’s “Road to Permissionless” series, Kunz discussed 1inch, how it started, and what they were preparing for Permissionless 2022. He began with what 1inch is: ^[2]

“1inch is a one-stop access for DeFi, we call it 'uh' because we have almost every liquidity source integrated in 1inch. So just imagine if you are going to buy an airplane ticket, you are not going to emulate to Lufthansa or to like Alaska Airlines, you are going to aggregate right to get the best rates. Sometimes if you have connections between the flights New York, Frankfurt, Dubai and so on, you need really the best airplane ticket also in the right time. And this is what we are doing for DeFi. If you are swapping one token to another token, we generate the path, the route like on Google Maps but more complex to exchange one asset to another asset in a fully non-custodial manner, in real P2P manner so you're interacting directly with the smart contract without trusting us by using our protocols which are multiple times audited, verified by the community as well and a lot of security experts.”

He then shared how 1inch was created: ^[2]

“1inch network itself started with vanish aggregation we built it on a hackathon over two nights in ATH, New York. It was May 2019. We didn't sleep at all over two nights; it was really hard. At the end, the room behind me started to change somehow, but I was able to finalize the prototype together with Anton Bukov, my co-founder. Some of the guys who I showed this product said, 'This is the next big thing,' and this is really the next big thing for DeFi. Like, it makes no sense to exchange the organ and access; it makes only sense to use aggregators to get the best result. And 1inch Network is nowadays more than just an aggregation protocol; it's a kind of order book limit order protocol in a fully permissionless manner, and this liquidity protocol multiple teams are already joined to our kind of network.”

When asked about why 1inch was so popular, Kunz responded: ^[2]

“So, we actually invented aggregation in DeFi, among multiple liquidity sources, in a single transaction fully atomically. That's why we have the biggest market share right now. There are some other guys who just started to follow us, like Xerox, for example. They actually built the autobooks limit order protocol and they came to the idea of 1inch after seeing a huge problem in DeFi: combining all liquidity sources into a single one using algorithms. Xerox started to do that and ParetoSwap also joined the competition. We are hackers, builders on hackathons and competitions, and we love competition. We compete very well. If you look at MetaMask, it's using us, Xerox ParetoSwap, and some other liquidity sources, and we have most of the market share there because we compete much better due to having more liquidity sources integrated.”

He also discussed their Layer 2 strategy for reducing gas fees and accessibility: ^[2]

“We have the 1inch Foundation and the Cayman Islands, which is a fully independent organization from us. They still hold some 1inch tokens and have a program for gas fee refunds. If you stake a specific amount of tokens, starting from around 1,000 tokens, you get a 25% discount on gas costs every month as a form of withdrawal. If you have around 100,000 1inch tokens staked, you get the full amount refunded in 1inch tokens every month for your swaps. It's a small mitigation to address the issue of high gas costs, although currently, this isn't much of a problem as the market has dropped significantly and gas costs are low.”

“However, Layer 2 is a good solution for the future. Layer 2’s a suitable solution for DeFi. Sharding architecture, Ethereum 2.0, it is designed for other applications, not for DeFi, as it disrupts finance. In centralized finance, atomic execution is necessary, whereas in our case, we execute advisory transactions involving multiple swaps, exchanges, and markets in between. Layer two solutions offer low gas fees, high security, and we've already integrated Optimism.”

Interviews/Panels

1inch Fusion

At the World Blockchain Summit in November 2023, Kunz, as the keynote speaker, discussed the growth and developments of the 1inch Network, tracing its journey from inception to its current status as a multifaceted decentralized finance (DeFi) platform. He introduced 1inch Fusion, a novel solution for token swaps that aims to enhance security, transparency, and user experience by utilizing a Dutch auction mechanism. Kunz delved into the challenges prevalent in the DeFi realm, such as unreliable swap rates and sandwich attacks, and elaborated on how 1inch addresses these issues through liquidity aggregation and stringent KYB and AML screening processes. He also shed light on the significance of professional market makers in ensuring fair rates and reducing the potential for manipulation, drawing parallels to the structure of a decentralized NASDAQ. Moreover, Kunz highlighted the developer portal, which offers open access to APIs, facilitating collaboration and innovation within the DeFi community. ^[3]

1inch in Dubai

In an interview with Phillip Lord of Pimlico Partners, Kunz recounted the 1inch Network’s journey from its inception as a hackathon project in 2019 to its establishment in the DeFi realm, boasting over 10 million wallets and billions in trading volume. He discussed the primary product, which focused on securing the best rates through swaps, alongside the development of self-custody wallets and a new hardware wallet prioritizing simplicity and security. With a global team of 150 individuals spread across Germany, Dubai, Amsterdam, Cyprus, and Bali, 1inch Network expanded its reach to diverse markets. Kunz highlighted Dubai's progressive regulatory environment, facilitating their expansion efforts with plans to secure licensing for the Middle East market. Looking back, 1inch Network was dedicated to enhancing developer accessibility, launching new hardware solutions, exploring atomic swaps, and researching decentralized solutions for Web3 applications. ^[4]

Future of DeFi

During the Paris Blockchain Week 2024, Kunz discussed the concept of "intents" in DeFi. He explained intents as planned actions aimed at achieving desired goals, focusing on what users wanted to achieve rather than how they achieved it. Unlike regular transactions, intent-based transactions simplify interactions and reduce user risk by allowing users to define their objectives without worrying about the execution process. This approach offered benefits such as optimized decision-making, automated processes, and improved risk management. Kunz highlighted examples of intents in DeFi, including limit orders, swaps, liquidity provisioning, and cross-chain swaps, with various protocols and projects exploring and implementing this approach in the decentralized finance landscape. ^[5]