One-click access to decentralized finance

In late 2019, Kyber Network arranged a virtual hackathon to discover and support developer talent around the world who are building on decentralized finance (DeFi), attracting over 300 participants.

My blog post is about the winner of this hackathon - DefiZap:

“DefiZap allows you to allocate your assets across multiple DeFi protocols in one transaction to save time and gas. Zap is a smart contract that auto-spreads incoming deposits across Compound, Fulcrum, TokenSets and others, based on pre-set allocations.”

Breaking down what DefiZap is

In essence, what DefiZap allows you to do is to access many different finance protocols on Ethereum with just one click.

With a use-case like this, you can see the benefits of having open-sourced applications in a highly composable system - selecting and assembling the different applications in various combinations to satisfy specific user requirements.

As an example, let’s go through a Zap named DAI LLP.

If you have let’s say 100 ETH, but you’d also like to receive some passive income on top of your investment, then this Zap might be for you. Here’s a breakdown of what this Zap does with your 100 ETH:

  1. Takes 66 ETH and provides it as liquidity to a decentralized exchange named Uniswap (50% ETH, 50% DAI). Providing it as liquidity means you’ll be receiving trading fees from Uniswap.

  2. Takes the rest of your 33 ETH and puts it on a 2x leverage. 

The result: You still have exposure to 100 ETH, but additionally to this, you’re also earning a passive income from trading fees by providing liquidity in a decentralized exchange. (here is a neat picture explaining this zap)

In the background, this zap involves three platforms (Uniswap, Fulcrum, Kyber).

Traction

DefiZap launched just two months ago. Within this period, there’s over 5600 ETH deployed via 1107 zaps. In USD value, that’s over $980,000. 

DefiZap is still in beta

Although DefiZap is already gaining popularity, you should proceed with caution if you want to deploy large amounts since it’s still in beta.

With DefiZap, because the zaps are using several platforms at the same time, you’re exposed to several smart contracts risks also with one-click.

It seems like every other week there’s a new DeFi app popping up, giving fuel to Ethereum’s network effect - every new application is making the other applications more valuable. With that, I’m glad to see tools such as DefiZap, that improves the user experience of DeFi.

You can check all of their Zaps here: https://defizap.com/zaps

-Edgar

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