The Liquidity Gap: How LPs Are Leaving Billions on the Table | Holly Atkinson at Pragma Lisbon 2026

Wed, Aug 12, 2026, 12:00 AM

Holly Atkinson, CPTO at 1inch, examines DeFi’s idle-liquidity problem and introduces 1inch Aqua as a shared-liquidity architecture. Concentrated-liquidity positions can leave large portions of capital outside the active trading range, with individual liquidity providers suffering most when positions are not continuously managed. Aqua lets a wallet’s token balance support multiple configurable strategies at once, creating a multiplier effect without moving funds into separate protocol contracts for every position. Atkinson explains why concentrated liquidity improved market efficiency while creating a management burden. Capital earns fees only when the market trades inside a selected range, so an apparently large position may be mostly inactive. Automated managers can rebalance, but individual LPs often leave positions untouched and bear a disproportionate share of idle capital. Aqua changes the accounting model by allowing strategies to reference tokens in a wallet instead of requiring every strategy to hold a separate balance. Liquidity providers can define ranges, spreads, decay rules, fees, and swap types, then create or cancel positions in a single transaction. Tokens remain in the user’s wallet under a revocable allowance; when the wallet lacks sufficient balance, fills stop and resume after it is replenished. Verified 1inch counterparties execute swaps, while fees remain attributable to each position. Atkinson presents the system as programmable, reusable liquidity rather than passive locked capital and invites developers to test the Aqua app, documentation, and open protocol. The promise is greater capital efficiency, more strategy flexibility, and more chances for LPs to earn fees from the same assets. A user can authorize a token once per chain, allocate the same available balance across several strategies, and set independent pricing or fee logic for each. The wallet balance acts as a hard cap, so strategies stop filling rather than creating an unsecured obligation. Verified resolvers execute swaps, while the LP retains control over allowances and can revoke access. Atkinson encourages developers to treat Aqua as infrastructure for new market-making applications, not only as a 1inch interface. 00:00 Introduction to Idle DeFi Liquidity 00:42 Dune Research on Capital Efficiency 01:13 The Scale of Underutilized Liquidity 01:48 Why Individual LPs Lose More 02:27 Introducing 1inch Aqua 03:03 Wallet Balances and Shared Strategies 03:37 Configurable Ranges, Spreads, and Fees 04:18 Shipping Positions Through 1inch Routing 04:50 Verified Resolvers Execute Swaps 05:22 Atomic Fees and More Swap Activity 05:54 Creating and Cancelling Positions 06:23 Self-Custody and Fee-Sniping Protection 07:00 Verifiable Strategy Configurations 07:39 Wallet Balances Cap Protocol Exposure 08:14 Compliance, Audits, and Resolver Controls 08:45 Aqua Risks and the Wallet-Pool Model 09:17 Liquidity Reuse Across Many Positions 09:52 Early Access for Hackathon Builders 10:55 Aqua App and Developer Documentation 11:30 The Three-Part Aqua Architecture 11:57 Virtual Balances and Token Movement 12:22 Building Custom Aqua Applications 12:52 Immutable Parameters and Swap Logic 13:21 Closing Invitation for Feedback _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 🇵🇹 *Pragma Lisbon 2026* Pragma Lisbon 2026 was held on June 25th at the Carlos Lopes Pavillion in Lisbon, Portugal and was an in-person summit for builders and leaders in the web3 ecosystem. Watch the full Pragma Lisbon 2026 YouTube Playlist here: https://www.youtube.com/playlist?list=PLMxB4xW8JYdk ETHGlobal's Pragma series takes place in cities around the world, and is designed to be a different kind of event. Pragma is a one-stage conference with founders-only on stage, bringing together a small group of curated attendees and speakers to discuss the future of web3 and reflect on the past. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ✅ Follow Holly Atkinson X: https://x.com/holdoesdev ✅ Follow 1inch X: https://x.com/1inch ✅ Follow ETHGlobal X: https://x.com/ETHGlobal​ Warpcast: https://warpcast.com/ethglobal Website: https://ethglobal.com YouTube: https://www.youtube.com/@UCfF9ZO8Ug4xk_AJd4aeT5HA _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Are you interested in Ethereum development and entrepreneurship? 👉 Sign up for the next ETHGlobal event: https://ethglobal.com/events 🎁 Get exclusive access and perks with ETHGlobal Plus! https://ethglobal.com/plus 📣 Want us to throw an event in your city? Tell us where! https://ethglobal.com/city