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1inch, a popular aggregator of decentralized protocols, has raised $175 million in what it calls a Series B funding round. It isn’t a traditional venture round as the company isn’t selling a stake in exchange for money. Instead, 1inch has sold $175 million worth of 1INCH tokens in a private token sales with institutional investors.

If you’re not familiar with 1inch, it’s one of the most popular DeFi (decentralized finance) protocol out there as it makes decentralized transactions more efficient. If you want to exchange cryptocurrencies, there are multiple ways to do so.

Historically, exchanges have been a centralized activity. Some hosted exchanges, such as Coinbase, FTX, Kraken and Binance, have thrived by managing trades between multiple assets. And yet, blockchains are supposed to be decentralized. These exchanges create a single point of failure.

“I definitely hope centralized exchanges go burn in hell as much as possible,” Vitalik Buterin said in a TC interview back in 2018.

Over the past few years, many teams started working on decentralized exchanges across different blockchains. For instance, on the Ethereum blockchain alone, people trade tokens using Uniswap, SushiSwap, PancakeSwap, etc. Thanks to liquidity pools, traders can exchange tokens directly on the blockchain.

The 1inch Network aggregates dozens of decentralized protocols so that traders can easily find the best exchange rate across multiple decentralized exchanges. 1inch competes with Matcha (0x) and ParaSwap.

Based on this Dune query, 1inch is approaching 1 million users on Ethereum — 195,000 users have interacted with 1inch over the past 30 days. And over the last two years, users have traded more than $100 billion in crypto assets using 1inch.

1inch has been transparent with me about the structure of the round. The 1inch foundation is in charge of the 1INCH token supply. This foundation has allocated a portion of the token supply to 1inch Limited for a Growth & Development Fund. Overall, that fund represents 14% of the total 1INCH token supply and 1inch Limited has used 8% of the supply for the Series B.

As part of today’s Series B, new investors are acquiring tokens from the Growth & Development Fund as well as from existing investors who want to sell a portion of their investments. The Series B round was led by Amber Group with around 50 investors participating. Some investors include Jane Street, VanEck, Fenbushi Capital, Alameda Research, Celsius, Nexo, Tribe Capital and Gemini Frontier Fund.

And 1inch will certainly need some money as it has run into regulatory issues. In September, 1inch started blocking U.S. IP addresses from using the app. “The geoblocking restrictions are working very effectively by restricting U.S. territories,” the company told me. That move comes just a few months after Uniswap restricted access to some tokens in the U.S.

1inch now plans to launch 1inch Pro, a separate and permissioned service that complies with U.S. regulation. In particular, 1inch says this new service will comply KYC and AML regulation (‘know your customer’ and ’anti-money laundering’).

1inch and 1inch Pro will never interact with each other, meaning that liquidity pools will be segregated. 1inch Limited will provide liquidity itself for 1inch Pro. With 1inch Pro, the company wants to convince institutional investors to use its new service. As for the rest of the world, they can still use the 1inch Network.

For now, there’s no release date for 1inch Pro. “We’re in the process of working out the regulatory landscape through a couple of law firms,” the company told me. But it could take a while as there’s a lot of uncertainty around DeFi regulation in the U.S.