Scaling DeFi for users, wallets, developers and protocols
In 2019, Instadapp achieved a position of 3rd in ETH locked value with a deep focus on improving the usability of DeFi. We did so over many key innovations, including DeFi smart wallets, simplifying cross-protocol complex transactions, and portability between protocols and stablecoins.
Moving into 2020 and beyond, we believe that building better user experiences in DeFi and making it easier for developers to build secure dApps remains the primary criterion for bringing this space closer to the mainstream. However, there remain several fundamental challenges on both fronts.
Ethereum accounts and wallets were designed primarily for token assets, while DeFi assets have a much higher level of complexity in terms of management, admin, analysis. This requires a completely different approach to UX, portfolio management, and admin delegation. This problem will only become more severe as the number of underlying protocols grows exponentially.
When asked to manage all their assets themselves, or under a single account, users are likely to lose their assets, trust insecure dApps, or provide allowances to many smart contracts. Developers, particularly those with more frontend and server experience, are critical for designing the use cases for mainstream users. Still, they might not have the required expertise to ensure security on on-chain applications.
To tackle these issues, we are announcing DeFi Accounts, a platform providing users and developers with a single point of integration to access all the DeFi protocols. We aim to make DeFi easier, scalable, and more secure for users, developers, and protocols alike.
|Users||Trustlessly manage, delegate, and optimize funds across any number of protocols.|
|Developers||Innovate interfaces and business models on top of DeFi accounts. Securely compose complex transactions without smart contracts.|
|Protocols||Allow your system to be easily accessed by new users and developers.|
Today, smart wallets have the potential to improve the usability of DeFi. However, they are too limited in scope and usefulness to replace main Ethereum accounts since customized proxies have to be built for every single new use case.
In contrast, once new protocols are connected to DeFi smart accounts with connectors, any developer can then easily extend their product to include cross-protocol transactions for those protocols by writing simple Web2 code without new smart contracts. This also leads to a much higher level of usability and security for users.
Building on DeFi smart accounts, developers (including Instadapp and wallets) can build powerful and secure interfaces that allow users to use one platform for all their DeFi needs.
One of the biggest barriers to scaling DeFi for users is the difficulty for users to be able to set owners or delegate managers for specific assets or DeFi use cases according to the level of trustlessness users are comfortable with.
This is a critical step for DeFi usability since different users will require different levels of delegation for various use cases. In essence, some might want their private keys to certain assets to be stored elsewhere, some would want the optimization of assets to be trustlessly managed by an expert, and others might want to delegate the staking and voting for rewards.
In the new Instadapp, users will initially be able to set multiple owners for individual DeFi accounts. Moving forward, you can also add Instadapp as guardian or manager of your account to help w account recovery, fund management, etc.
Moving forward, developers will be able to set granular permissions for delegation. These means, building on DeFi accounts, they will be able to execute specific sets of DeFi actions for users, but they will not be able to transfer out the assets unless the user provides those permissions as well. This type of granularity is of major importance towards trustless delegation.
DeFi assets are fundamentally more complex than traditional token assets to use and far harder to manage and track in terms of optimization, returns, etc. By managing everything under one Ethereum account, it becomes impossible to manage over time.
Instadapp and other developers building on top of DeFi Accounts can allow users to create multiple accounts for different use cases they might have. This will mirror the current financial world, where users have different accounts for different usage and investment needs, often managed by completely different people.
Combined with the rest of the features above, this means that users will not just be able to manage and track funds separately but also use different protocols, run analytics, or extend with shared ownership and delegation on each separate account.
DeFi wizards can build complex cross-protocol transactions for DeFi Account holders without needing to write any solidity code. Here are some use cases that would require no or minimal, smart contract experience.
Instadapp's protocol bridge to port assets between Maker and Compound, or any between other lending protocols.
DeFiZap's composed transactions to deploy across multiple liquidity and lending protocols.
iEarn's optimizer that automatically maximizes yield across protocols.
DefiSaver's automated CDP saver to save positions when prices fluctuate.
As we add new connectors for new protocols, dApp developers will be able to compose their services with them without any need for new smart contracts or get their users to perform complex transactions.
With built-in composability, liquidity bridges, and unlimited options for authorization, developer building on top of DeFi accounts will be able to easily innovate on new business and product models with minimal security worries.
New Business Models: Build new revenue streams and networks from automating or helping users delegate their DeFi activities. Easily include their own set of fees to be added in the same transaction.
Portability of Funds: With the existence of our liquidity bridge, their users will be able to easily port their positions or perform complex transactions between protocols using the connectors and liquidity pool.
Built-in Security: Smart account transactions are secure by default, since no new smart contracts are deployed, which vastly simplifies and removes attack vectors.
These features are all designed to make it easy for developers to build products and use cases that advance the future of programmatic and networked money management.
Wallets are typically the first and most trusted access points for users, which means it's the perfect place to introduce DeFi services. DeFi Accounts makes it easy to both build a DeFi "section" to complement the regular interface and innovate on new product and business models.
Think of the regular Ethereum account as the checking account, and DeFi accounts as the savings and investment accounts for the users, which you will be able to both offer new seamless use cases easily while being able to generate fees by performing key actions on behalf of the users.
Implementing extensible DeFi in your wallet becomes very simple since it creates a clear space for your users to easily store their DeFi assets and experiment with new use cases while remaining completely trustless and without interfering with their regular Ethereum account.
Importantly, using DeFi accounts also means that you are never locked into using any given protocols, and will be able to easily adapt your product based on the latest innovations or your own business needs.
We are committed to helping drive awareness and adoption for new innovative protocols and services.
We would like to collaborate with all protocol developers to create connectors to extend the use cases for both Instadapp users as well as DeFi account holders. As discussed earlier, once connectors are created, developers will be able to easily offer the protocols as part of their interface or composed transactions.
We are also designing the Instadapp UX to encourage users to try out innovative new use cases. When they create a new Defi account, they will be encouraged to use the account to experiment with new DeFi services and protocols.
We will be launching a new Instadapp alongside DeFi Accounts. The initial version of Instadapp will start simple and be built together with our users and the broader DeFi community. For current users of Instadapp, there will be a migration tool for migrating their assets to DeFi accounts.
The trustless nature of Instadapp (and DeFi accounts) means the user's assets will always belong to the user, and they can easily try out in the new system without any rush to move their assets over until they are 100% confident. There is no need to migrate their assets until they want to; the current Instadapp will remain fully functional.
We are currently brainstorming on exciting new use cases that would not have been possible using the current Instadapp architecture, including optimization across protocols, delegated voting, and a lot more - and would love to hear from users.
Apart from launching the new Instadapp and DeFi Accounts, we will also begin to incrementally roll out developer docs and examples, as well as developer-focused communication groups, as we seek to build the future of programmatic money management together as a community.
We invite everyone interested in this to join us on this journey to create the next generation of DeFi together:
If you are a DeFi user, tell us what you think of the features and ideas above and how you would like to expand your usage of DeFi
If you are a developer who wants to leverage DeFi to its full potential for your users and innovate on new product and business models
If you are a protocol developer who wants to allow Instadapp users and web3 developers to adopt and innovate on your service.
It is very early days for both InstaDApp and DeFi, and we would like to work on it together with the rest of the ecosystem.
One of the main things we realized deeply is how improving the user experience of DeFi, far from just being an interface issue, involves deeply integrated efforts across the stack — from the underlying protocols to the smart contracts that glue it together, to the interfaces that the vast majority of users will see, to the myriad manners in delegated managers can take up key roles for the users.
For DeFi to go mainstream and remain open for usage and innovation, we have to improve the UX in DeFi along these key dimensions for both developers and users, along these key dimensions:
Simplicity: Ability to manage and delegate their accounts seamlessly.
Freedom: Ability to move, optimize, experiment with new use cases, and port assets between protocols seamlessly.
Security: Ability for users to use DeFi securely according to their level of comfort, for most developers to be able to build complex dApps without smart contracts (and the security holes that might emerge), and allowing protocols to focus on their core layer.
This is an undertaking that has to be taken up as a cohesive effort by the ecosystem, and we are hopeful that DeFi Accounts can contribute our part to building the new foundation for the user experiences needed to make DeFi mainstream.