CHAI Unipool DeFiZap Tutorial.

How to get 4% interest on DAI + earn additional fees on Uniswap.

vitalik.eth@VitalikButerin
Did you know that you can now get 4% interest on DAI in the format of an ERC20 token?
chai.money

Martin Lundfall@MartinLundfall

Introducing `chai.sol`, a simple ERC20 wrapper over the Dai Savings Rate: ✅ Interest accruing Dai ✅ Gas-less token transfers ✅ 184 LOC from the makers of MCD We're soliciting feedback from the community before launching on December 1st 🍵 -> https://t.co/MGSEQ6BQWm

Hopefully you’ve heard of this awesome new project called Chai - a way to earn Maker’s Dai Savings Rate while freely being able to trade your tokens. As someone constantly looking for new ways to evangelize exciting ideas, we’re excited to unveil a new Zap geared specifically at Chai adoption.

For those who saw our latest release of Unipool Zaps, we recently announced a way for users to enter into Uniswap Liquidity Pools using one token (currently ETH but soon DAI as well). DeFiZap takes that token and splits it between ETH and the token in question, effectively allowing you to start earning liquidity fees without having to go out of your way and supply both sides of the pool.

The demand for these Zaps has been phenomenal and it really got us thinking - what other Uniswap pools can we help with next?

Today, we’ve decided that our newest Uniswap pool will be Chai, and here’s why:

  • Chai allows users to passively earn the 4% Dai Savings Rate (DSR) in a liquid fashion, meaning you automatically earn interest while being able to freely exchange and trade the token.

  • Chai’s Uniswap pool is currently flying under the radar (roughly 13 ETH in liquidity at the time of writing) meaning we need more providers to help aid in reducing slippage.

  • The limited liquidity means we serve to gain from a large portion of the liquidity fees, opposed to something like DAI or MKR pools where we’re earning a tiny fraction of the larger pool.

  • Chai supports gasless transactions, something in line with our larger vision for 2020.

  • Chai is pretty cool, and we like supporting cool things.

So how does it work?

Just like all our Unipool Zaps, all users need is ETH but this one reduces a few extra steps to help avoid slipage. While the process for wrapping Dai into Chai is pretty simple, we’re always striving to reduce barriers to entry as much as possible. 

Right now if you want to go from ETH to CHAI you will experience significant slippage because the pool size for ETH/CHAI is so small. So users need to convert ETH to DAI and afterwards, visit chai.money to wrap DAI into CHAI.

We want to blow up the ETH/CHAI pool on Uniswap with our brand new CHAI Unipool Zap! Here’s what it does in one-click:

  1. ~ 50% of your ETH input is first converted to DAI on Kyber to avoid ETH->CHAI direct conversion slippage.

  2. Converted DAI is then wrapped into CHAI. Learn more on chai.money

  3. CHAI + other 50% ETH input are added to the ETH/CHAI Liquidity Pool on Uniswap and you receive minted liquidity tracking tokens back to your wallet. which helps you to earn 4% interest on DAI PLUS generate fees from one-click add liquidity to CHAI Uniswap Pool using just ETH.

Why is this important?

  • On top of 4% interest being generated by holding 50% in CHAI, you will also be generating exchange fees from people trading on ETH/CHAI market on Uniswap (subject to impermanent loss). Keep in mind supplying liquidity on Uniswap is for experienced traders only, you should fully understand how this works before making any financial investments.

  • CHAI Unipool Zap cuts the process from 5 Metamask interactions into 1. Avoiding things like token unlocks, swaps, wraps and adding liquidity as separate transactions. Allowing end-users to simply input how much ETH they wish to supply, without worrying about how much CHAI is needed to match + avoiding slippage.

  • Entering with just one token allows investors to better track returns.

DeFiZap.com UI Walk-through:

STEP 1: Visit https://defizap.com/zaps/unipoolchai and click ⚡️USE THIS ZAP

STEP 2: Select your desired input amount, confirm with Metamask signature and wait for the transaction to settle.

  • Ethereum tx: https://etherscan.io/tx/0xcff50cbb50f17cba9ffcec7bd991904d1d6bc885a4813094e33cd56604cf8b19

  • Out of 2 ETH input, 1.01 was converted into DAI and after wrapped into CHAI resulting in a total of ~127.935 CHAI. NOTE: if you were to convert ETH directly to CHAI on Uniswap, you would receive ~120.183 CHAI as you can see below. (This is how this Zap is different from other Unipool Zaps.) Finally, 0.99 ETH is added to Chai/ETH liquidity pool along with ~124.473 CHAI. Leftover 3.462 CHAI along with minted Uniswap Liquidity Pool Tokens (UNI-V1) are sent back the wallet. DeFiZap does not charge any fees on top of network gas. Soon we will enable completely gas-less transactions.

What happens after?

  • Once you receive your ETH/CHAI Uniswap Liquidity tracking tokens, you can track your returns on pools.fyi.

  • Withdraw liquidity when desired on uniswap.exchange

It’s important to note: when you use DeFiZap, you mint & receive the same liquidity/position tracking tokens as when separately using Uniswap, Compound, bZx, Synthetix, etc. on your own. WE DO NOT CHARGE ANY FEES.

DeFiZap doesn’t spread your money into 'top 10 on coinmarketcap' - Zaps infuse capital into DeFi protocols built on top of Ethereum, furthering user adoption.

It’s been exciting watching other projects and even other hackathon participants already start integrating DeFiZap. Hit us up if you are interested in doing that on discord: https://discord.gg/FjDj3Xf

ENS INSTRUCTIONS:

For those of you who don’t know, we’ve registered each Zap with the Ethereum Name Service, enabling a Venmo-like experience for end users to place margin trades on Fulcrum, add liquidity on Uniswap, or generate interest on Compound all without having to leave your Ethereum wallet.

Traders effectively enter and exit trades with one token (for now ETH), meaning it becomes that much easier to track tangible ROI. We’re also going to be adding stablecoin support, allowing you to enter Zaps with DAI.

Chai Unipool Zap smart contract source code has been verified on Etherscan and registered with the Ethereum Name Service under CHAIUnipool.DeFiZap.eth so that adding liquidity on Uniswap is as easy as sending a text.

Note: make sure your gas limit is set to 1,500,000


CHAI Unipool Announcement on DeFi Nation:

Resources:

⚡️ Introduction to DeFiZap.

💼 Explore available Zaps.

⚙️ DeFiZap Github.

⏯ DeFi Tutorials.

✋ Integration interest form.

Community love:


Disclosure: This is not investment advice. Please consult your own independent investment advisor before making any investment decisions.