Aqua vs classic AMM pools: total value locked vs total value unlocked

This article explains why total value locked (TVL) may not always be a meaningful metric and why, in the context of liquidity provision, it may be more accurate to speak of total value unlocked.

You added liquidity to a pool and helped increase its total value locked (TVL). But how much does TVL really tell you about whether your liquidity is working?

Locked capital is not the same as active capital. That is where 1inch Aqua introduces a different approach: shared liquidity. Instead of tying capital to one pool or strategy, Aqua lets multiple strategies draw on the same balance, subject to execution constraints.

That means more chances to see activity, in more markets, across more token pairs.  Instead of thinking about ‘total value locked’, we can think instead about ‘total value unlocked’: the amount of potential liquidity we’re creating across our positions, rather than how much we’re removing from circulation elsewhere.

To see why this matters, compare 1inch Aqua with DeFi’s most common liquidity model: classic AMM pools.

How classic AMM pools work

In a classic AMM, liquidity providers deposit tokens into a pool that acts as a shared pot of capital. Traders swap directly against this pool, and fees are generally distributed pro-rata, depending on protocol design.

This design creates key properties:

Liquidity is typically tied to a single venueOnce deposited, capital cannot be used elsewhere.

Capital only earns when trades occurLiquidity generates fees only when swaps happen in that pool, without active management by the provider.

Fees are sharedAnyone providing liquidity at the right time receives a portion of fees, regardless of how long they’ve been in the pool.

MEV and fee extraction

In classic AMMs, fees are paid into the pool and distributed to everyone who has liquidity active at the moment a trade occurs. Fee ownership depends on timing rather than duration of exposure. As a result, AMMs are vulnerable to fee extraction strategies such as just-in-time liquidity, where bots add liquidity immediately before a large trade and remove it right after, capturing fees without taking meaningful market risk. Long-term LPs see their share of fees diluted even though they provided liquidity over time.

How Aqua differs from classic AMM pools

Aqua is not another liquidity pool. It is a shared liquidity layer that lets you use one wallet balance across multiple positions at once. Your tokens are not deposited into Aqua contracts. They stay in your wallet and move only when a taker swap is executed against one of your positions. This design creates a very different set of properties.

Liquidity is not pooledTokens are never deposited into a shared AMM. They stay in the LP’s wallet and are accessed by strategies only when needed through atomic execution.

Each strategy belongs to one LPStrategies are individually owned, and each LP controls their own positions. Multiple strategies can use the same LP balance, improving capital efficiency.

Reduced JIT or fee snipingBecause there is no on-chain deposit or withdrawal into a shared pool, the common JIT vectors seen in pooled AMMs largely fall away - the timing games that enable classic JIT liquidity have no direct equivalent in this design.

Total Value Locked vs Total Value Unlocked

Classic AMMs are built around TVL. Capital is measured by how much is locked inside pools, even if much of it is not being used.

Aqua is built around TVU. Capital is measured by how much of it is actively available for execution across markets. That difference is subtle, but it changes everything.

Aqua does not try to replace AMMs. It changes how liquidity connects to them.

Instead of asking LPs to choose one pool, one range or one strategy, Aqua lets a single balance serve all of them. That is what it means for liquidity to be truly unlocked. As with any form of liquidity provision, Aqua positions remain exposed to market risk, and fees are not guaranteed.

Activate your DeFi liquidity with 1inch Aqua.

Disclaimer: This content is provided for informational purposes only. Nothing in this material constitutes financial, investment, legal, or tax advice, or a recommendation to enter into any transaction. Interacting with Aqua involves risk, including the possible loss of all funds involved.