When it comes to the DeFi aggregation layer, you may first think of income aggregator projects such as YFI and YFII, which aggregate fund pools with high yields for investors and automatically optimize their investment portfolios so that investors can obtain optimal returns.
In addition, there are transaction aggregators, such as 1inch, Metamask Swap, Paraswap and other projects. As the liquidity of a large number of tokens is dispersed in different DEX products, transaction aggregators can help users obtain the best transaction depth. Widely recognized by the market.
Most of the aforementioned aggregators only focus on the vertical product direction and have not set foot in other DeFi vertical products, but they all reflect the trend that the value of the DeFi aggregation layer is accelerating expansion.
What is the DeFi aggregation layer?
Since the beginning of this year, the DeFi market has continued to maintain a rapid development trend. The total amount of locked-up funds has exceeded 44 billion U.S. dollars, involving multiple vertical directions such as trading, lending, asset management, and insurance. However, due to the ease of use and friendliness of many DeFi products, there are insufficient , The more complex product logic and complex operation process restrict DeFi products to a broader audience market.
In the current DeFi aggregation track, only vertical transaction aggregation and revenue aggregation projects have received the attention of the market, and top players such as 1inch have emerged, but there are few comprehensive aggregation projects that integrate asset management, trading, lending and other products. Appeared in public view, such as InstaDApp, Zapper.fi, DeFi Saver and Zerion.
Most of these applications have a good investment background and lock-up data. Two of them have already received investment from Coinbase. InstaDApp and DeFi Saver have locked up amounts of US$1.04 billion and US$600 million, respectively. They are ranked 11th on the data website DeFiPulse. And the 15th place. This data does not match their popularity.
To a certain extent, encrypted wallets are also aggregated applications, providing users with a rich variety of DApp products and DeFi functions, but their role is limited in reducing specific product usage thresholds and enhancing user product experience.
For the sake of convenience, the DeFi aggregation layer application referred to in this article specifically refers to the vertical aggregation application that has visual asset tracking and management functions and integrates at least two types of DApps such as income, transaction, and lending, such as InstaDApp and other applications mentioned above. These applications can visually present the distribution of user assets in different DeFi applications, including the debt situation and the capital pool LP situation, and display the yields of different lending applications and LP capital pools as well as the products with the highest yields, providing users with direct participation Entrance.
In short, the DeFi aggregation layer application integrates the DApps and functions commonly used by users in the DeFi market, which saves users the time to compare the income of different DApps, and can bring users a better DeFi experience. So why this track rarely attracted the attention of users in the past, there may be three reasons.
First, the product needs of most DeFi users in the past were relatively single, mainly due to the best transaction depth or the best pledge yield. The current aggregate products can solve these problems well;
Second, in the past, most of the assets of DeFi users were concentrated on the Ethereum mainnet. The current wallets such as MateMask and Imtoken can fully meet the needs of users for asset management;
Third, none of the current mainstream DeFi aggregation layer applications has officially issued tokens, the value capture mechanism is not clear, and the exposure is insufficient in the absence of wealth effects.
However, as the DeFi market environment changes, these reasons are likely to gradually disappear, and the DeFi aggregation layer application will become an important infrastructure for opening up different blockchain network DeFi applications and pushing DeFi into a broader market.
First, as the logic of DeFi derivatives products further mature, investor education is gradually in place, and more and more traditional financial investors enter the DeFi market, many DeFi users will not need simple transactions and income, but get involved in savings. /Loans, contract transactions, liquidity and other complex operations make user assets distributed in different applications, and it is difficult for users to intuitively obtain the distribution of assets.
This also means that the user’s DeFi experience will decline, so the value of the DeFi aggregation layer application will be highlighted here, providing users with a one-stop DeFi management platform, which may become an infrastructure similar to “Alipay” to a certain extent.
Second, recently, multiple Layer 2 solutions have begun to land. Many user assets have begun to transfer to Layer 2 networks such as Polygon. At the same time, public chains of exchanges such as BSC have begun to rise. DeFi users originally concentrated on Ethereum assets and will be further dispersed in different locations. The blockchain network will also cause further cumbersome user asset management processes.
At present, Zapper.fi and other DeFi aggregation layer applications have supported or will support users to view their asset distribution status in BSC, Polygon and other networks, and directly conduct related transactions.
Third, InstaDApp, the DeFi aggregation layer application with the highest lock-up volume, has announced in February that it will issue tokens and start liquidity mining in March, which may further stimulate the flow of funds into DeFi aggregation layer applications. Taking into account the current prevalence of airdrops in the DeFi market, these applications that have not yet issued coins may also further stimulate market attention through airdrops.
Next, Chain Catcher will briefly introduce the functions and features of the current main DeFi aggregation layer applications. Examples include InstaDApp, Zapper.fi, DeFi Saver and Zerion.
Four major applications
InstaDApp was launched in December 2018. It received US$2.4 million in financing from Coinbase Ventures, Pantera Capital and other institutions in December 2019. Its goal is to eliminate the complexity of DeFi products by aggregating assets and liquidity into a single layer. Make DeFi easier for everyone to use.
Compared with other applications, the main feature of InstaDApp is the use of smart wallets and bridging protocols to integrate the main DeFi protocol. Users need to mobilize MateMask to register a smart wallet on the website and transfer funds to use it. All user wallets are unified by the Instadapp smart contract. Control, users do not have private keys and mnemonics. Currently, the website already has about 20,000 smart wallet users.
At present, InstaDApp integrates DeFi protocols including Maker, Aave, Compound and Uniswap. Users can trade their encrypted assets on the platform and manage their own trading pairs LP in Uniswap, and at the same time mortgage LPs for leveraged financing in the lending agreement supported by the platform.
For the aforementioned loan agreement, InstaDApp not only supports users to perform regular deposit and withdrawal operations, but also provides users with one-click withdrawal of all collateral, collateral swaps, debt swaps, automatic debt refinancing, and other rich functions. It also supports The user transfers the collateral between the agreements.
In February of this year, Instadapp also announced the DeFi Smart Layer (DSL) plan, allowing front-end developers to use DSL as middleware to meet all their DeFi needs, and allowing most users to use the DSL in these applications, while supporting users to transfer assets Migrate to Layer2.
InstaDApp also expects to issue tokens and start the liquidity mining function in March, and finally realize decentralized governance.
Zerion was launched in 2018. It is positioned as a one-stop platform for building and managing DeFi product portfolios. It received US$2 million in financing from Placeholder, Blockchain Ventures, and Gnosis in December 19th.
Currently, users can use the application by connecting to the webpage using the Matemask wallet on the Zerion official website. Its main functional modules include views, investments, savings, loans and transaction history.
On the view page, the application can present the trend of the user’s wallet asset value and the specific asset distribution in the form of chart K lines. After the user clicks to hold tokens, they can also view the token value K-line and the realized profit value on this page.
At the same time, users can purchase encrypted assets for their wallet addresses directly through credit cards and other channels on this page.
On the investment page, the app recommends DeFi index tokens such as DefiPulse Index and Synth sDEFI to users. At the same time, it recommends some well-known tokens to users according to social tokens, layer2 and other categories. Users can see the price of tokens after clicking. K line and introduction can be purchased directly on the right side of the page.
At the same time, users can also view the DeFi with the highest increase and the largest decline, and the fund pool with the highest yield on this page.
Zerion’s aggregate transaction page function is not much different from Instadapp.
On the savings page, Zerion mainly cooperates with Cmpound, and users can earn interest income by collateralizing their assets. On the loan page, Zerion allows users to choose Maker or Compound to mortgage their assets and lend funds.
Zerion also specializes in the development of APP products. According to the quarterly report released by Zerion in January this year, the total number of active mobile users of the application exceeds 16,000.
Zapper.fi was formed by the merger of DeFiZap and DeFiSnap in May 2020. It is positioned as the ultimate hub of decentralized finance, making DeFi easier to use and access. It was awarded Framework Ventures, Coinfund, The LAO, CoinGecko and other institutions raised $1.5 million in financing, and a few months later, they received seed expansion rounds from Coinbase Ventures and Delphi Ventures again.
At present, users can use the MateMask wallet to connect to the website. Its main functions include asset data dashboard, aggregated transactions, adding transaction pair liquidity, income cultivation, layer2 transfer, and viewing transaction history.
The main feature of Zapper.fi is the development of the cross-protocol smart contract Zaps, in order to reduce the friction between different protocols, which essentially saves time and money, thereby allowing users to perform cross-protocol operations more efficiently and access a variety of Investment products.
Specifically, the platform can bundle the operations that users need to complete in exchanges into a transaction on the chain, eliminating the time for users to wait for each operation to complete. At the same time, because the transaction is bundled, part of the gas fee does not need to be paid, achieving a reduction The effect of gas cost.
For another example, when users provide liquidity for a certain fund pool, Zapper.fi can help users only use any supported single currency to provide liquidity for a specific fund pool without having to convert to the two required by the fund pool. Tokens, reducing operation steps and gas fees.
The official also provided a specific case. If users only have ETH in their hands and want to invest in the Curve’s sUSD pool, they must manually convert ETH into DAI and USDC before entering the sUSD pool. With Zaps, users can directly buy sUSD CRV funds with ETH instead of manually swapping ETH into DAI and USDC. “This can reduce transaction fees and the number of transactions, and ensure 100% capital utilization.”
On March 8, Zapper.fi also announced that it will become a multi-chain platform, supporting Layer 1, Layer 2, and side chains. At the same time, it currently supports tracking the portfolio of tokens on Polygon and QuickSwap; supports Optimism and tracks the Synthetix protocol; and tracks BSC previous generations. Currency portfolio. In addition, Zapper will integrate Optimism, Arbitrum, XDai Stake and Fantom Finance.
Zapper.fi also said last year that it would support lending agreements such as Aave, but it does not currently support it. It is also the only platform in this article that does not support lending agreements.
DeFi Saver was launched in April 2019. The original purpose is to help DeFi users avoid the situation of mortgage asset liquidation. It provides intelligent savings and automatic liquidation protection functions based on the integration of Aave, Compound, and Maker. The current positioning is a one-stop shop. DeFi management solutions.
Similar to Instadapp, the functions related to the loan agreement in DeFi Saver require the user to first mobilize the Matemask wallet to register a CDB account and transfer funds to use. Its characteristic function is to help users automatically manage their debt positions and maintain them in a certain proportion. If it exceeds 230%, it will be automatically increased to 200%. If the ratio is less than 170%, it will be repaid to 200% to prevent liquidation.
At the same time, DeFi Saver can help users transfer their debt positions and convert collateral in different lending agreements.
DeFi Saver also launched the aggregate transaction function, which integrates the liquidity of Uniswap, 0x, Kyber network and other DEX, and will charge a 0.0125% handling fee for each transaction. Earlier this month, DeFi Saver also integrated Reflexer, a stable asset protocol.
Currently, DeFi Saver’s official website shows that its smart wallet users are more than 770, and the total locked-up funds have reached 570 million US dollars.
to sum up
Taken together, the DeFi aggregation layer application allows users not to access multiple interfaces and perform a series of transactions, but can perform all operations from a single interface, track the income of the asset portfolio, and realize the transfer and reduction of debt positions that are difficult to achieve by a single application. Functions such as transaction slippage and cost.
These advantages will make DeFi aggregation layer applications inevitably gain more adoption in the future, together with products such as encrypted wallets, will lay an important foundation for DeFi applications to move towards a larger market.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.