Why we invested in Zapper

Not financial advice.

We are excited to announce our investment in @Zapper. In this note we will give an overview of the platform for those who may not be familiar with this cornerstone of the industry and share why we believe Zapper will continue to play a central role in the development of decentralized finance.

Introduction

Zapper is a one-stop-shop for deploying and managing DeFi positions. It is one of the most widely known and used tools in the entire industry. In contrast to traditional full-service banks and brokers in TradFi, DeFi, an industry still in relative infancy, has seen several different platforms emerge offering a wide range of services to users e.g.: lend/borrow on Compound, interest on Aave, trading on dYdX, swapping on Sushi and insurance on Nexus. While specialised services are useful and inevitable in a new industry, it has led to asset silos and industry fragmentation which is an inconvenience for DeFi users from an asset management perspective. As most DeFi users know, Zapper solved this problem and, in many ways, did so better than TradFi.

Zapper dashboard, clean categorized UI.
TradFi siloed dashboard. Source: https://www.wellsfargo.com/online-banking/tour/online-brokerage/

Background

Zapper was formed in 2020 following the merger of two popular grassroots products aiming to solve the problem above. These projects were DeFiSnap (ecosystem tracker dashboard) and DeFiZaps (entry gateway to those ecosystems via “Zaps”). As explained by Zapper: “DeFiSnap’s intuitive dashboard to easily track positions paired with DeFiZap’s system of smart contracts to deploy capital across multiple DeFi protocols in one transaction, create a holistic user experience to tap into and monitor the wider DeFi ecosystem” (https://twitter.com/zapper_fi/status/1256170281695162368). Zapper is, in essence, a non-custodial dashboard to seamlessly view, deploy to, and migrate between top income opportunities in DeFi.

Zaps

We are big supporters of platforms that aim to reduce the complexity in DeFi and make it easy for your average person to engage with DeFi services. The rapid deployment to these opportunities is possible via “Zaps” allowing users to deploy capital through custom smart contracts, thus reducing the cost, while seamlessly converting tokens to the necessary positions for any given platform. Summary of Zapper:

  • Removes the complication of seeking out protocols to deploy capital.
  • Places hundreds of liquidity options in one dashboard.
  • Summarizes deployed assets by class, e.g. liquidity pools, wallets, yield farming, debt, etc. as opposed to by protocol.
  • Fast strategy deployment.
  • Automatically divides your liquidity into whatever proportion the pool requires, e.g. 50/50 in Uniswap, 80/20 in Balancer.
  • Portfolio rebalancing via shifting capital to other platforms.
  • Multi-pooling allows diversification of asset distribution across various liquidity pools.

Prior to platforms like Zapper, the process of e.g. supplying liquidity to an ETH-DAI pool on Uniswap would take 4 or more transactions (and a lot of gas). With Zaps it’s only one click and saves on Ethereum gas fees by bundling multiple transactions into one.

One-click PancakeSwap liquidity. Source:https://twitter.com/zapper_fi/status/1380270186163535873

The Decentralization of Finance

The internet brought about the democratization of information and the disruption of many industries from travel and tv to media and music. Banking has been slower to change given the lack of a similarly democratized money layer on the internet, allowing anyone to freely create and exchange value. This all changed with Bitcoin and crypto.

Some change had occurred prior to crypto, with fintech applications like Paypal and Revolut offering a smoother banking and payments experience, all on mobile and web. This forced traditional banks to release their own, usually inferior, mobile apps. Crypto, as a next step in this democratization of finance, has not gone unnoticed by FinTech or TradFi with the top names like Paypal, Revolut, Venmo, Robinhood and Visa now supporting crypto. As traditional banks were forced to innovate to keep up with fintech it appears fintech is beginning to realize the inevitability of crypto and pushing to remain relevant.

The speed, security and programmability of crypto is revolutionizing finance and its integration into FinTech and TradFi is likely to continue. In fact, we see it as likely that most of the heavy lifting (transfer, conversion, settlement and security) in FinTech transactions will be handled by a blockchain base layer, something the Bankless team refer to as a DeFi mullet (https://newsletter.banklesshq.com/p/the-defi-mullet-market-monday-lite), whereby “The UX of FinTech and the open financial infrastructure of crypto will lead to apps that are 100x better than alternatives.”

Source: https://newsletter.banklesshq.com/p/the-defi-mullet-market-monday-lite

As more and more fintech platforms, wealth managers and traditional banks integrate crypto in order to remain relevant and improve offerings to their customers, they face challenges including technical execution, entrenched crypto-native incumbents and industry knowledge. The majority of firms will have no desire to “reinvent the wheel” (assuming they had the technical expertise and skill in execution to do so) and will seek partnerships with top, trusted platforms. Zapper, with custom smart contracts, optimized for rapid deployment with low fees, a proven history of security and ready to use API would be a natural integration. The “DeFi in the back” future of finance could see Zapper playing a major role as a key deployment and tracking layer.

Zapper features

Zapper has grown from a simple dashboard to a multi-functional DeFi asset management platform. Zapper aggregates the top opportunities and allows filtering and ranking by protocol, ROI, liquidity, etc. Zapper now supports token exchange, liquidity pools, yield farming, and cross chain token bridges.

Exchange

Zapper’s “Exchange” function allows token swaps without leaving the dashboard, giving you the best price from an aggregated list of top swap protocols.

Liquidity Pools

Liquidity pool opportunities.

Zapper aggregates all the top liquidity pool opportunities and allows filtering by token and protocol as well as sorting by liquidity locked and ROI, saving users hours or more of researching and comparing opportunities and giving full visibility and control to the user. This allows users to invest in different pools depending on their desired return and risk appetite.

Farming

Farming opportunities.

Zapper’s farming features allow similar filtering and sorting as with pools, however, returns take into account the reward tokens earned via different strategies. Such comprehensive visibility on a wide range of protocols and rewards helps unlock the power of DeFi for everyday users.

Token bridge

Zapper has been EVM compatible from the ground up and supports a bridge to Polygon with Optimism coming soon.

History and NFT viewer

Finally, Zapper has a searchable history allowing users to easily keep track of their transactions as well as an NFT viewer to track digital art, crypto-collectibles, etc.

Searchable history to view past transactions and export data.
Easily view your NFTs and their current value.

Multi-chain, L2s, sidechains and L1

For any asset management tool, coverage is everything. Zapper is the best in the space at partnerships and integrations. A major recent addition to the Zapper tracking ecosystem has been Polygon, a popular Ethereum sidechain framework for building and connecting Ethereum compatible chains. This integration is particularly useful for users of QuickswapDEX, the leading AMM on Polygon.

Crucially, Zapper has been EVM compatible from the beginning and fully supports Optimism with Synthetix being the first protocol tracked. Portfolio tracking for BSC tokens is also supported.

Multi-network / bundled wallets view:

Source: https://twitter.com/zapper_fi/status/1372286711523336194

Zapper has also introduced a bridge option to ETH L2s and sidechains as mentioned above. More will be added in the near future with the ability to withdraw to Ethereum. This focus on “future-proofing” and giving users optionality without forcing preferences is a key strength of the Zapper platform.

Why Zapper?

Long term flexibility

Due to Zapper’s custom “Zaps” smart contracts, Zapper is in a unique position to make custom integrations and deployments across multiple platforms without leaving the Zapper dashboard. One example is the recent announcement that Zapper is “very close to releasing a feature where you will be able to add and remove liquidity on QuickswapDEX and PancakeSwap” with further integrations with Optimum and Arbitrum in the works. This speed in keeping up with the latest trends and technologies has become a signature of Zapper and is one of the reasons why we are super bullish on the platform’s future.

User experience

Zapper finds the right balance between simplicity and control, careful not to abstract away too much complexity for users who want to fully experience and learn DeFi, while still being an easy first tool for new users into crypto.

New user onboarding

In addition to the functionality above, which makes it easier for newcomers to deploy strategies, Zapper also invests a lot of time educating the community on various DeFi trends.

Source: https://learn.zapper.fi/articles/farm-stablecoins-with-curve-on-polygon

learn.zapper.fi

The Zapper team understands that to grow their user base as well as the industry as whole, demystifying the world of DeFi and educating the general public is key. Zapper’s learning portal has a range of articles to educate users ranging from introductory topics like “What is a token?” to overviews of advanced farming strategies and how to execute these strategies on the Zapper platform.

Diverse range of articles written by Zapper team.

As a key knowledge base, learn.zapper.fi is a useful gateway into the world of DeFi and a great way of attracting new users to the Zapper platform.

Competitive landscape

Other players in the DeFi aggregator space are Zerion and DeBank.

  • Zerion doesn’t have comprehensive integrations in a single vertical, but allows its users to interact with a select few protocols in each sub-niche; DeFi indexes, L2 scaling tokens, Aave interest bearing tokens, TokenSets etc. It has expanded its offering across multiple verticals but doesn’t support every protocol in these verticals. Zerion also has a mobile app on both Android and iOS which may be useful in onboarding TradFi users to DeFi.
  • DeBank has a slick interface however currently only supports Metamask and is limited to basic token swaps.
  • Zapper is by far the easiest way to interact with liquidity pools, automating the split of capital between the pool assets. The platform has a comprehensive selection of LPs, and up until now had less integrations across DeFi’s various verticals, previously taking the approach of focusing on a single niche and providing comprehensive coverage. This has changed with recent bridges to L2 protocols Optimism and Polygon with more integrations expected in the future. Lastly it supports a range of wallets, including WalletConnect for mobile, to maximise user onboarding.

Sino strategic value add

There are a number of ways Sino can help Zapper continue its growth, particularly in Mainland China, from community outreach and management to localization and strategic partnerships. We look forward to working closer with the team.

Conclusion

Zapper’s evolution from a simple portfolio tracking dashboard to a one-stop-shop that includes cross-chain deployment (all powered by custom smart contracts) has made it a leader in DeFi. With a team committed to fast integrations, user-centric design, and constant upgrades in line with industry developments, we believe zapper will remain a cornerstone of the industry for the foreseeable future.

Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained here constitutes a solicitation, recommendation. endorsement or offer by Sino or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

A team of former consulting, Wall Street, private equity, government, and corporate veterans accelerating the blockchain revolution