One of the drawbacks of decentralized finance (DeFi) protocols today is that you need different platforms to perform specific functions instead of having them all in one place. And that’s the problem that Instadapp is trying to solve.
Instadapp is a DeFi platform that provides users and developers with a single point of integration to access all the DeFi protocols. As we are in the early days of the decentralized web, Instadapp aims to be a window into multiple DeFi services — tools that make transactions of crypto assets easier.
You could think of Instadapp as the gateway to all other DeFi.
In August 2018, Sowmay Jain and Samyak Jain laid the foundation for Instadapp at ETHIndia. The platform released its version 2 update in April 2019, which started off as an interface built on top of Maker at the ETHIndia hackathon.
In October 2019, Instadapp conducted a successful fundraising round organized by Pantera Capital. The project raised $2.4 million to create the founders’ vision for the protocol. The round included several other notable investors like Coinbase Ventures, Kyber Network’s Loi Luu, as well as Naval Ravikant.
What is InstaDapp?
Instadapp is a DeFi application that provides a user-friendly interface that could interact with other DeFi protocols. The protocol also functions as a software wallet with an intuitive design built on top of popular DeFi projects like Compound, Uniswap, etc. that manage crypto assets.
The platform aims to drive interoperability between protocols for power users and simple development. In addition, it also allows developers of all stripes to start out leveraging the complete potential of DeFi.
How Does It Work?
To use InstaDApp, it is necessary for the user to have an Ethereum web3 wallet like MetaMask or Trust Wallet. With this, the user can manage all their digital assets from the app dashboard.
The protocol makes use of smart contracts to translate simple instructions from users regarding where to move their assets in a series of complex steps. It then executes those steps, making the experience of managing assets significantly easier for users. They take no fees for any of these executions.
The user only needs to supply the funds to pay the gas price for moving assets.
Additionally, the platform is completely non-custodial and stores all transactions and assets in a Contract Wallet. The smart contracts monitor the entire assets.
All data is publicly available, and InstaDApp holds none of the user’s assets, preserving the security benefits of decentralization while adding in the convenience of a centralized asset management platform.
The major activities include:
- Lending – Deposit your assets and earn interest on it
- Borrowing – Borrow assets directly from the InstaDApp dashboard
- Leverage – Maximise the capital you’re able to trade with
- Swap – Instantly exchange tokens with respective web3 wallet
InstaSwap is powered by Kyber’s on-chain liquidity protocol to supply the fastest and easiest method to securely buy and sell tokens through an easy, decentralized manner. Once you connect to your respective wallet address to Instadapp via Trezor, Ledger, or Metamask, you can further swap tokens seamlessly.
Follow the steps below to swap tokens on Instadapp:
- Before Buying or Selling any tokens on InstaDApp, you have to provide an allowance. An allowance is merely permission that a user needs to grant to a Decentralised Exchange (InstaDApp) by token owners (you) before those smart contracts can execute.
In case you do not provide an allowance, you will receive the following message:
- Once you provide an allowance, click on BUY or SELL, then add the number of tokens you would like to swap. You can swap with either ETH or DAI, which are quoted currencies.
- Next, click on “Execute Trade” to verify the buy/sell. You’ll receive a metamask notification confirming your trade. Click on submit and ensure the transaction.
- It is always a good idea to set the lowest conversion rate. The dashboard guides you during volatile times by displaying a percentage of the Minimum Acceptable Rate.
- Note that setting a high value may result in a failed transaction and you would be charged gas fees. It would be better if the Minimum Acceptable Rate is 97%.
- Now, you will now be able to view your transaction on Etherscan.
- After the transaction draws on the blockchain, the balance will be updated.
Lending and Borrowing
Instadapp acts as a bridge to lend/borrow your cryptos and earn/pay interest by plugging into another popular DeFi protocol, Compound Finance. Compound is an open-source protocol that permits developers to create DeFi applications on top of it.
It aims to have efficient Money Markets on the Ethereum blockchain. The platform algorithmically sets interest rates on loans based on supply and demand.
Note that lending on DeFi protocols incurs risk. You must only use money that you can afford to lose when engaging in these activities.
Another protocol Instadapp is integrated with is Uniswap.
Uniswap is a decentralized exchange with a configuration of two smart contracts. The platform is hosted on both the Ethereum blockchain, as well as a public open-source front-end client. It’s a compatible on-chain market maker enabling the swapping of ERC-20 tokens.
In General, Uniswap is a protocol on Ethereum for swapping ERC-20 tokens. It is built for the community to trade tokens without platform fees or middlemen. Moreover, unlike other exchanges that match sellers and buyers to determine prices and execute trades, Uniswap uses a simple math equation and pools of tokens to do the same job.
But how does this relate to Instadapp? The V2 iteration of Instadapp has the ability to access decentralized liquidity pools via Uniswap.
Collateralized Debt Position (CDP) is a smart contract that runs on the Ethereum blockchain via the Maker platform. It is a variation of financial market derivations setup by MakerDAO back in 2014. CDP is a representation of a debt position that is backed by an underlying pool of assets.
CDP allows users to deposit an asset into a smart contract as collateral for a loan on the Maker platform. Once you deposit the asset, the CDP holds the assets and allows the user to generate the equivalent USD value in Dai that they wish to borrow. Once granted these tokens, users can then transact with them just like any other cryptocurrency.
How does Instadapp fit into all these? It enables users to take out CDPs from two different protocols: Maker and Compound. Furthermore, there are plans to integrate with other platforms like Fulcrum, Dharma, and Nuo as well.
Overall, InstaDApp remarkably simplifies the experience of asset management in the DeFi world. Also, it preserves the benefits of decentralization by operating as a non-custodial platform, leveraging smart contracts to ensure that users always have 100% control and ownership over their assets.
On top of that, it greatly improves convenience for users by providing them with a single product that can help visualize their assets’ positions and easily move their assets around to optimize returns and maximize profits.