DeFi Analytics

DeFiZap: Instant exposure across multiple DeFi protocols

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DeFi tools can be used as if they were Lego bricks, in other words, they can be combined and recombined to create new ones. There are many tokens that have been created in this way, but also entire platforms. One such platform is DefiZap.

DefiZap is, in fact, a dApp based on other DeFi platforms. It takes advantage of several protocols with the aim of combining them in a single interface and simplifying their use as much as possible. This not only reduces clicks and increases the speed of use, but also reduces transaction costs.

Multiple DeFi Protocols

This dApp integrates the services offered by Uniswap, Maker, Compound, bZx, Kyber Network, Synthetix, Fulcrum and Set, which are all DeFi protocols on Ethereum, and although its development is still in the Beta test phase, the dApp is already operational.

Since it basically facilitates the use of these protocols for anyone who wants to invest in the DeFi sector, the dApp first requires the user to complete questionnaire to identify what type of investor they are, what level of experience they already have with these tools, and what financial strategy they intend to follow. It also asks whether the user has a bullish or bearish view of Ethereum for the coming months.

Several Zaps available


Depending on how the user answers this questionnaire, the dApp will redirect them to one of several available Zaps. These are predefined, pre-packaged strategies that allow the user to start investing immediately, and without much hassle. The available Zaps are various, and for each of them, there are three features available: learn more about them, enter or exit.

Each Zap has a descriptive tab that explains how it works, though it must be said that these tabs are not always easy to understand. Since DefiZap is designed to simplify investments, the questionnaire for choosing the right Zap is fundamental, considering that the descriptive cards of the Zaps are probably out of the cognitive capacity of the average user. The questionnaire makes it feasible for the average user to navigate through this complex world made up of many bricks nested together, and so without necessarily having to learn too much about them, they can invest in the various Zaps simply by identifying the strategy that comes closest to their vision of DeFi.

Obviously, if on one hand, DefiZap simplifies investments in order to make this world accessible to practically anyone, on the other, it greatly reduces the possibilities. For example, at this moment there are still only 18 Zaps, although anyone can suggest the creation of new ones.

So it’s a tool particularly suitable for beginners, or those who want to get straight to the point without much hassle, but is not particularly flexible for the most experienced investors, or those who have very particular demands. ETH is used to invest, and each Zap has its own ENS address to which it is possible to send Ether, plus gas, to start the investment. This allows entering the Zap, from which, it is also possible to exit at any time using the appropriate function.

This tool also uses decentralized smart contracts, using Ethereum of course, and for this reason, it can be used freely, in a non-custodial way, allowing to enter and exit the Zap at will, and without having to go through intermediaries. It must be said, however, that acting as access interface to other decentralized finance protocols actually promotes investment in the dark, which means that the users don’t need to deepen their knowledge of the protocols they are actually using.

While this may seem like a good thing on the one hand, since it greatly simplifies investments, especially for the less experienced users, on the other, it implies greater risk, because there is always a certain level of risk when investing in financial instruments, even if they are decentralized. The point is that favouring investments without knowledge of the underlying, exposes users to the inevitable risk of this lack of knowledge, and this could bring some problems.

Obviously, as is often the case when seeking simplification, there is also a risk of superficiality, but this is the inevitable price to pay when choosing to invest little time or resources in investigating. Moreover, since Zaps often use different protocols at the same time, paradoxically the risk is even greater because it takes only one of the protocols used in a Zap to create problems for the whole Zap. It is enough to think about what happened recently with bZx/Fulcrum.

Some Numbers

Since Dec 9, 2019

For now, although it is still in Beta phase, this dApp has already been used by more than a thousand users, with more than ten thousand transactions made to date. The total transaction volume is almost 15,000 ETH, or more than $70 million, with a daily peak of 1,000 ETH.

Therefore, it certainly cannot be said that it is a tool used only for testing by a small number of people, and this shows that tools of this type, which simplify access to decentralized finance, are well appreciated, even by those who have a certain volume of assets to invest. An interesting thing about this dApp is that in November 2019 it won the Kyber DeFi Hackathon, winning the $5,000 first prize in KNC tokens.

In addition, members of the team that developed it, amateur_dev, Nodar Janashia, Rohith Srivathsav and Tosh Sharma, received an NFT ERC-1155 each called “Kyber’s Shield of DeFiance”, sponsored by Enjin, and a Kyber SWAG package. The virtual hackathon lasted 7 weeks and was aimed at creating tools for the growth of the DeFi ecosystem in general. DeFiZap was considered the most interesting project not only because it aggregates different DeFi products, but also because it helps to collateralize the different positions in an easy way.

In other words, it offers inexperienced users the possibility to exploit the different mechanisms of different protocols, providing a “click and point” interface that also allows taking advantage of niche tokens, such as SETH by Synthetix or ETH20MA by Set Protocol, with simple transactions. This saves time, as it is only necessary to use one platform, but it also allows saving gas and avoiding exposure to almost any DeFi product.

The development of decentralized finance is moving in two directions, one more technical and complex, and the other simpler and more user-friendly. While protocols like Synthetix or Set Protocol go in the first direction, DeFiZap goes in the second, and both are required to achieve mass adoption.

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