Multi-Collateral DAI: first 120 days of liquidity provisioning on 🦄Uniswap💦

Analyzing DAI<>ETH LP vs. 100% ETH holding vs. 50/50 holding since MCD inception.

This report analyzes liquidity provisioning on the new DAI<>ETH Uniswap exchange from the moment it was deployed on Block #8,957,433 (November 18, 2019 04:15:18 PM +UTC) to #9,692,210(Mar-17-2020 11:58:52 PM +UTC) or roughly 120 DAYS.

📊DAI<>ETH LP Activity Since Inception:

Some conclusions:

  • HOLDING 100% ETH would result in ~🔻35.97% LOSS

  • HOLDING 50% in ETH + 50% in DAI would result in ~🔻17.98% LOSS

  • DAI<>ETH LP would result in ~🔻10.07% LOSS🔥

  • Since inception (~120 days ago) DAI pool liquidity provisioning outperformed holding 100% ETH around 75% of the time or ~90 days.

  • Uniswap liquidity provisioning on active pools is proving to be a great alternative to hedge your assets as exchange fees generated seem to be outpacing any impermanent losses incurred. Past few weeks we’ve witnessed some of the most volatile times in crypto history. Extreme volatility resulted in increased volume, especially around stable tokens such as DAI and USDC as many rushed to exit their crypto positions. For example, on March 13th alone, DAI<>ETH LPs proportionally earned ~$75,000 for processing ~$25M worth of swaps!

Additional Resources:


Please note that DeFiZap is an experimental project. DeFiZap is not providing any investment advisory or recommendation service. By using DeFiZap or its services, you agree that you are using the Services at your own risk and that you will not and do not hold DeFiZap or its team members liable should the services not perform as per your expectation. DeFiZap is not a licensed financial advisor under any law. Please consult your own independent investment advisor before making any investment decisions.

zUNI - Programmable Pooling Incentives.

An ERC20 token that lets you accrue additional sETH LP tokens from automatic SNX rewards rebalancing.

We at DeFiZap are big fans of Synthetix project and are always looking for ways to improve the experience for this community. 

For example, our sETH Unipool Zap helps users add liquidity to the sETH<>ETH Pool on Uniswap in one-transaction, using just one asset (ETH or sETH or other ERC20s). Inputs are split into appropriate proportions to enter the pool with. In return sETH LP tokens are minted which represent your claim on liquidity provided + accrued exchange fees. Over 8,000 ETH has been added to the sETH pool using this Zap alone since it’s deployment less than 3 months ago.

As soon as the new Unipool contract for SNX rewards was announced, we added a visual interface to help users easily stake their sETH LPs in Unipool contract:

But we knew we had to do more. Today we are proud to propose something we already have available for testing - zUnipool tokens or simply zUNI

zUNI tokens represent a claim on sETH LP stake in Unipool + accrued SNX incentives from sETH Unipool Staking Reward system, which are auto-rebalanced into additional sETH LPs and re-staked in Unipool contract.

zUNI users can convert their sETH LPs into zUNI tokens at any point, by calling stakeMyShare

Likewise, they can redeem their zUNI for their original sETH LPs + additional sETH LPs (accrued from rebalancing SNX rewards into additional sETH LPs), by calling getMyStakeOut

Motivation:

Up until recent deployment of Unipool contract, SNX rewards for sETH LPs on Uniswap were essentially distributed manually.

  • Before: Take snapshots of LP addresses and airdrop SNX rewards proportionally.

  • Now: Stake LP tokens in Unipool which proportionally accrue SNX rewards every second, are redeemable anytime to:

    • sETH LP tokens + accrued SNX rewards.

    • JUST SNX rewards.

    • JUST some sETH LP tokens.

  • Why zUNI?

    • Once staked in Unipool, sETH LP tokens cannot be moved - zUNI is an ERC20 which can be transferred freely and is always proportionally redeemable for an ever growing amount of sETH LPs.

    • Accrued SNX rewards are not being utilized - anytime zUNI is minted or redeemed, accrued SNX rewards for all zUNI holders will rebalance into sETH LPs which are re-staked to accrue SNX rewards at a faster rate.

    • Improve sETH<>ETH peg with every SNX rebalance as SNX is used to buy sETH from Uniswap in order to obtain necessary proportions to obtain LPs from adding sETH+ETH liquidity to the pool.

Additional information:

Contracts:

Testing on forked mainnet instructions.

Why testing on Forked Mainnet:

The Contract that we have developed and in the process of testing requires to interact with (a) the Unipool contract that is giving out the rewards and (b) Uniswap, to be able to convert the underlying SNX into sETH LP tokens.  We wanted to test these functionalities in “as close to as real mainnet” situations considering the quantum of SNX required for distribution {yes, that can be gamed on a test net} and (most importantly) the deep volume that exists on Uniswap {which is only on the mainnet (creating that on a testnet would be very cumbersome)}.  Hence, our entire testing has been on a forked version of the mainnet.

Instructions:

Front-end [WIP]:

To help us design and develop a worthy UI/UX, we partnered with one of our fellow MetaCartel members - RaidGuild. This page will be launched as soon as the community approves, tests and audits zUNI smart contract.

Some WIP drafts:


Next Steps:

  1. Proposal to Synthetix’s Grants DAO.

  2. Review code, submit PRs with your feedback here: https://github.com/amateur-dev/Unipool.

  3. Main-net deployment.

  4. Are you interested in creating incentives to improve liquidity around your pool? Submit a request: https://airtable.com/shrQVmnmEdXkr0Xm3

    Join the conversation


Please note that DeFiZap is an experimental project. DeFiZap is not providing any investment advisory or recommendation service. By using DeFiZap or its services, you agree that you are using the Services at your own risk and that you will not and do not hold DeFiZap or its team members liable should the services not perform as per your expectation. DeFiZap is not a licensed financial advisor under any law. Please consult your own independent investment advisor before making any investment decisions.

How to use DeFiZap⚡️🌈🦄🚀💸⚡️

Zaps are the Amazon one-click of DeFi...learn how to zap into DeFi positions in one transaction.

This post was originally posted by our good friend Ryan Sean Adam in Bankless. It’s a program which blends money and tech insight to help you level up your open finance game every single week. Subscribe if you still haven’t.


Dear Crypto Natives,

I love simple tools that make everything else in the DeFi ecosystem better.

Zaps from DeFiZap are one of those tools and it’s time we did a tactic on them.

Does anyone remember how painful it was to buy something on Amazon in when it looked like this? A ten-step process only suffered by the uber geeks brave enough to submit their credit card online.

Back then one-click eCommerce was considered a major innovation! Amazon had to license a one-click patent from Apple to even attempt it.

That’s where we are today in crypto. Simple transactions are still painful. And it’ll take a thousand tiny UX innovations like Zap to get us to mainstream.

I have hope. Because as we’re leveling up…so is DeFi.

Let’s learn about Zaps.

-RSA


TACTICS TUESDAY:

Tactic #25: How to use a Zap


DeFiZap is a system of smart contracts—Zaps—that deploys ETH (and now other ERC20s!across multiple DeFi protocols in one transaction. It’s the Amazon one-click of DeFi. Use Zaps to get instant access to DeFi opportunities directly from your Ethereum wallet including 💸Lending, 🦄Pooling, ⛽️Staking, and 🚀Leveraged Liquidity.

  • Goal: Pick a Zap based on a DeFi position you want to take

  • Skill: Beginner

  • Effort: 30 minutes

  • ROI: Hours of time & $100s in gas for frequent DeFi users


Why use a zap?

Zaps allow you get into a DeFi position in one transaction—it’s called zapping in.

Zapping in

Say you have ETH and want a position in the Uniswap ETH-DAI pool. This yielded 4% over the last 90 days but you think ETH to USD price will stay flat (important due to impermanent loss) and Uniswap fees will increase yield above the Dai Savings Rate.

Well, it’s a painful process to get into that position. You need to supply half ETH and half DAI. Takes 4 transactions. 10 minutes. Ugh. Ugly as eCommmerce in the 90s.

Zap allows you to do it in one click.

Zapping out

Now say you zapped into the Uniswap ETH-DAI position above. You made profit, now you want out. You can zap out the same way you zapped in. One transaction. Easy.

There are dozens of Zaps now. Each Zap is a recipe for getting into and getting out of a DeFi position—in one click.

Which Zap should I pick?

This is like asking which DeFi positions should I take? It depends what you’re trying to accomplish. DeFiZap has a simple survey you can take that recommends a few based on your tolerances. I expect we’ll see Zaps integrated directly in more wallets too.

Today Zaps provide more benefit to power users—people who already know the position they’re trying to take and the risks of each protocol and want to execute it with less time, effort, and money. Almost like an automated OTC desk.

Zaps are generally practical—they don’t shotgun your capital across the 'top 10 on coinmarketcap'—they inject into DeFi protocols built on Ethereum. Easy interactions in and out of protocols can supercharge user adoption. Though users should be aware of the risks of each underlying protocol.

Flavors of Zaps

There are many flavors of Zap today and more are added all the time. We’ll focus on Unipool Zaps for this tactic.

Unipool Zaps 🦄

Unipool Zaps allow anyone to earn trading fees by adding liquidity to Uniswap Pools using ETH (or ERC20s).

Unipool Zaps auto swaps half of your input into appropriate ETH/ERC20 portions required to match for the pool, effectively allowing you to start earning liquidity fees without having to go out of your way to supply both sides of the pool. This is especially useful to help liquidity providers measure their returns.

Some popular Unipool Zaps include:

⚡️sETH Unipool: Bullish on ETH
⚡️MKR Unipool: Expect ETH to MKR rate to remain flat
⚡️DAI Unipool: Expect ETH to DAI rate to remain flat
⚡️CHAI Unipool: Expect ETH to CHAI rate to remain flat
⚡️General Unipool: Pick your own ETH-Token pool

The sETH pool keeps your ETH Exposure

If you want to keep your exposure in ETH the sETH Unipool Zap allows for one-click liquidity to sETH Pool on Uniswap using just ETH. This way you remain exposed to ETH price while generating fees from people trading ETH/sETH on Uniswap Pool plus extra SNX staking rewards. (⚠️RSA note—sETH does expose you to the risks of the Synthetix platform—make sure you understand those thoroughly before proceeding)

The cDAI and CHAI provide lending interest while you earn trading fees

You probably know a bit about DAI from our recent cDAI and CHAI articles. When holding cDAI users accrue interest based on the lending rate at any given time—8.5% as of today. CHAI works the same way, less risky than cDAI and earning 8% now.

The CHAI Unipool Zap and cDAI Unipool Zap allow you to enter these respective liquidity pools with just ETH—you earn Uniswap trading fees on top of the cDAI interest rate!


⚠️Before entering a Uniswap Pool make sure you understand the concept of impermanent loss which was covered here or here so you’ve have clear expectations on gain and loss potential.


Other Zaps for lending and leverage are also available. Though again, users should assess the risks of each lending and leverage protocol before using them. For example, some of the Zaps are configured to use the Fulcrum protocol which was recently attacked(RSA—I’m looking forward to Zaps that automate insurance on these protocols!)

Zaps Cheatsheet

Here’s a quick cheatsheet on popular Zaps available and the positions they provide:

Example:
Zap into the sETH Unipool

Zap into the sETH Unipool in a two steps and one transaction.

Intermediate level: Zap in via website

  1. Connect MetaMask or Fortmatic wallet

  2. Go to the sETH Zap and click ⚡️ZAP IN

  3. Select your desired input amount and confirm. 

Advanced level: Zap in via ENS

You can also Zap in via ENS! Since the sETH Unipool Zap was registered with the Ethereum Name Service under sETHUnipool.DeFiZap.eth adding liquidity is as easy as sending an Ethereum transaction. (Note: make sure your gas limit is set to 1,500,000.)

(Above: adding liquidity to sETH Unipool by sendiing ETH to ENS name)

Final Thoughts

Zaps are an awesome tool to make it faster, easier, and cheaper to get into popular DeFi positions. You can zap into positions and zap out of them in one transaction.

While Zaps make it easier to enter and exit positions, it’s still up to you to assess the ROI and risks of the underlying positions you’re entering. These are powertools, not a short-cuts. Before zapping into a Unipool you need to know how Uniswap works, before zapping into sETH learn the risks of Snythetix. Don’t zap into positions without doing your due diligence. Level up first. That’s why we do the program.

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

‌Resources

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

QUESTIONS? JOIN US ON DISCORD or TELEGRAM.

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️


Please note that DeFiZap is an experimental project. DeFiZap is not providing any investment advisory or recommendation service. By using DeFiZap or its services, you agree that you are using the Services at your own risk and that you will not and do not hold DeFiZap or its team members liable should the services not perform as per your expectation. DeFiZap is not a licensed financial advisor under any law. Please consult your own independent investment advisor before making any investment decisions.

Frontier⚡️DeFiZap—Bringing Zaps to Mobile.

Access interesting opportunities in DeFi in one tap!

DeFiZap is thrilled to announce our latest integration with Frontier—enabling one-tap access to DeFi on the go!

Zaps showcases the true power of composability by combining lending, borrowing, staking, pooling and more. Users deploy capital across multiple protocols in a single transaction—saving time & money accessing new financial instruments built on Ethereum.

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

DEC 10 - FEB 20

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

Over 9,500 ETH has been deployed into DeFi via ⚡️1,800 Zaps⚡️ since our beta launch on December 10th.

Our integration with Frontier brings DeFi to your fingertips!

Users with Metamask Mobile, imTokenTrust wallet, Fortmatic can interact with Zaps and seamlessly track their acquired positions through Frontier’s mobile interface.

🍎: apple.co/2ORqvbh
🤖: bit.ly/2ORqKTJ

About DeFiZap.

DeFiZap uses specialized smart contracts — Zaps — to deploy capital across multiple DeFi protocols in one transaction. Get instant access to DeFi directly from your Ethereum wallet. With lending, borrowing, staking, pooling, Leveraged Liquidity Pooling and more coming soon, DeFiZap is well-positioned to compose brand new use cases in finance.

Note: When using DeFiZap, users mint & receive the same liquidity/position tracking tokens as when separately using Uniswap, Compound, Maker, Synthetix, etc., on their own. With DeFiZap, you achieve the same end result just in less time and gas fees. Everything is routed through the supported protocols contracts, meaning there are no extra security risks added.

Rather than spreading capital across ‘ the top 10 tokens on coinmarketcap’ — DeFiZap injects capital into financial protocols built on top of Ethereum, furthering user adoption in #DeFi.

About Frontier.

Frontier makes it super easy for users to Track, View and Manage positions across multiple protocols in real-time without having to give away private keys on mobile.

We really hope you enjoy this feature! Show Frontier some love! Rate them on the App Store and Play Store!

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

Resources

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

QUESTIONS? JOIN US ON DISCORD or TELEGRAM.

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

Integration examples:

iearn.finance

  • Robo-advisor aggregating not only lending but also pooling yields based on AMM.

  • Currently $5M+  locked in smart contract (AUM) which uses Zap in / Zap out to re-balance between pools.

    DeFiSnap.io

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

Recent community love:

DefiSnap@defisnap
DefiSnap ♥️ @DeFi_Zap Happy to announce that DeFiZaps are now supported on
defisnap.io. View your balances grouped by Zap. ⚡️⚡️⚡️
Andre Cronje@AndreCronjeTech
Any reason you aren't using @DeFi_Zap yes? Seriously, to anyone that ever thought doing crypto things were complicated, just go have a look at
defizap.com 1 click everything. These guys are scary!

Nodar.DeFiZap.eth @NodarJ

Boom! And with our new @zapier + @sendwyre integration you can go Apple Pay -&gt; Liquidity Provisioning in one go⚡️ https://t.co/nHe3iN4Zqq

QUESTIONS? JOIN US ON DISCORD or TELEGRAM.

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

Please note that DeFiZap is an experimental project. DeFiZap is not providing any investment advisory or recommendation service. By using DeFiZap or its services, you agree that you are using the Services at your own risk and that you will not and do not hold DeFiZap or its team members liable should the services not perform as per your expectation. DeFiZap is not a licensed financial advisor under any law. Please consult your own independent investment advisor before making any investment decisions.

Results from Product Validation Day by IDEO CoLab Ventures and MetaCartel.

In the spirit of ETHDenver, we wanted to share some insights from the outstanding product feedback we’ve received over the course of the weekend.

DeFiZap was honored to be selected as one of the projects to participate in IDEO and MetaCartel’s Product Validation Day on Valentine’s Day.

The workshop touched on everything from UX hurdles to user-onboarding and general user preferences. As a part of this exercise, we were encouraged to demo our product to suite of test users (both technical and non-technical) and want to share our findings with the public.

Huge shoutout to Dmitriy Berenzon, Cooper Turley, and Matt Solomon for participating in our user interviews & providing valuable feedback.

Surveys

When it came to helping new users understand how to get started with DeFiZap, it was fascinating to see that it’s much easier for users to find the right Zap using our introduction survey.

By analyzing preferences like risk tolerance, market sentiment and investment styles, our surveys have served a great foundation for recommending the first Zaps users should select.

Through our testing, we learned the large majority of our users interface with our surveys, and that it confirms our original assumption that surveying is a great way to direct attention in a calculated manner.

Building on this, we want to expand on our existing survey to create more detailed responses, ultimately providing even more tailored feedback on where users should be focusing their attention when using Zaps.

Sorting

When it comes to interfacing with our Zaps, our test users pointed out that it would be helpful to see how they stack up against one another. This may consist of something like historical returns, average volume or general grouping to make it easier to compare different Zaps through unique filters.

Optionality

With our recent introduction of Zap-outs, users now have the ability to quickly exit a Zap in one click. Our biggest takeaway was that non-technical users would love to have a basic, standard interface IN TANDEM with an optional advanced interface.

For example, when using one of our LLP Zaps, the standard option would simply close the entire position in the selected asset (ETH, DAI, etc.). Using the advanced option, users could close a portion of their Zap rather than the whole thing.

The main thing to note here is that many users would like entry in one token to exits in that same token in a quick, intuitive fashion. While there may be sophisticated traders looking to leverage their positions, for the most part it’s likely we will offer a standard interface to quickly Zap in and out.

Guides + Tips

Building off our survey feedback, it’s interesting to note that all of our user interviews noted they would like more tips on when to leverage specific Zaps.

Through the creation of Zap Guides, it’s possible for DeFiZap to provide recommendations on various Zaps based on market conditions, recent traction or general arbitrage opportunities.

What to Expect

Following the launch of our General Unipool Zaps - quickly allowing anyone to enter any Uniswap Pool - we’re gearing up for a suite of new features including:

  • Pool Bridging

  • Any ERC20 input

  • Gas-less Zaps

  • Arbitrage Zaps

  • Insured Zaps

  • Dynamic Zaps

  • Private Zaps

  • Atomic Zaps

  • Create your own Zaps

We’ve been working to integrate Zaps into a ton of important projects like Wyre, Zapier, MyCrypto, Frontier, Mosendo, Nexus Mutual, Sablier, Balancer, Pooltogether, Unlock, Curve Finance, iearn.finance, Defisnap and more, and hope to take this user feedback to further mold our product.


Resources

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

QUESTIONS? JOIN US ON DISCORD or TELEGRAM.

⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️⚡️

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Please note that DeFiZap is an experimental project. DeFiZap is not providing any investment advisory or recommendation service. By using DeFiZap or its services, you agree that you are using the Services at your own risk and that you will not and do not hold DeFiZap or its team members liable should the services not perform as per your expectation. DeFiZap is not a licensed financial advisor under any law. Please consult your own independent investment advisor before making any investment decisions.

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