The 1inch Aqua protocol introduces a liquidity provision model that differs from conventional solutions, allowing the same wallet balance to back multiple positions simultaneously.
Unlike traditional liquidity vaults —such as those offered by Yearn and other automated managers—, where capital is deposited and committed to a specific strategy, Aqua keeps tokens in the user’s wallet until a swap that requires them is executed. This eliminates the need to split a balance across different strategies before knowing where the real trading demand will concentrate.
The problem it seeks to solve is the following: a liquidity provider with $100,000 who wants exposure to three different strategies must fragment their capital into three parts, reducing the efficiency of each position. With Aqua, that same balance can back all three positions at once, prioritizing allocation based on where activity actually occurs.
Assets remain in self-custody until execution, which preserves the user’s control over their funds. Aqua’s proposition does not replace the automation of liquidity managers, but rather operates on a prior layer: how capital is allocated before demand appears.
Source: https://1inch.com/blog/post/aqua-vs-lp-vaults-and-liquidity-managers
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