Defi Insight: InstaDapp protocol

InstaDapp intro

InstaDapp is trying to build a middleware protocol. You can think of InstaDapp just like Stripe, where all different payment methods, from credit card payments to cryptocurrencies, are integrated into one layer with API access for developers. Just like Stripe, Instadapp is trying to bring all different DeFi protocols under one roof and provide developers with easy-to-use tools to build their solutions. While Stripe focuses only on payments, Instadapp covers the whole DeFi ecosystem from payments, stablecoins, AMMs, and lending protocols. The goal of Isntadapp is to become the Web3 bank account for users and developers looking to get into DeFi. Before InstaDApp, users would manually track their assets and identify optimal interest rates, collateralization ratios, and other parameters on each platform which takes a lot of time and effort.

Figure 1: InstaDapp Defi Smart Accounts (DSA) (source: https://docs.instadapp.io/)
  • Interop — cross-chain transfers of positions (lending, debt positions, or AMM positions).
  • Assembly — aimed at developers Assembly is the open-source dashboard for the InstaDapp Protocol.
  • Refinance — refinance your DeFi positions between protocols by utilizing flash loans.
  • Flashloan aggregator — Many flashloan providers charge different fees (eg Aave, MakerDAO, Balancer, etc.). Instadapp has aggregated all these different routes along with other complex ways to get flashloans giving developers the ability to get access to the flashloans with the lowest fees. Additionally, by combining the liquidity of all pools, the aggregator could provide deeper liquidity to the user.

InstaDapp Lite

Instadapp Lite is an easy way for users to deposit to earn interest from the most popular DeFi strategies on the market. The Lite version of the protocol utilizes Strategy Vaults to reduce the complexity and gives users the easiest way to earn interest on their assets. A Strategy Vault is a smart contract containing the specific DeFi strategy the vault utilizes. After users deposit their assets, the protocol uses these assets by deploying the optimal yield optimizing strategy. This can involve a series of on-chain transactions such as swaps, migrating funds, leveraging protocols, claiming staking rewards, and other market-related activity.

Figure 2: InstaDapp Lite asset overview (source: https://lite.instadapp.io/)

Recent challenges

Blockchain and especially DeFi are still high-risk industries, especially when deploying DeFi strategies. While InstaDapp is trying its best to stay secure, the protocol still depends on the security and liquidity of the different DeFi protocols they integrate with. One recent example is the meltdown of Terra/Luna. The crash impacted many DeFi protocols directly and indirectly. While the market was experiencing one of its most significant downturns, Lido Finance’s stETH price began to depeg from ETH. Because InstaDapp used yield optimization with Lido, users’ funds got temporarily frozen by the team, and withdrawals were not allowed. To solve this problem, the team and investors added additional collateral ($35m) to the protocol vaults in order to support the peg of stETH. To cover its losses, the InstaDapp team is introducing a 1% management fee for Lite vaults starting in July 2022.

The INST token

InstaDapp launched its network governance token (INST) in June 2021 on Ethereum. The idea behind the token is to gradually move toward forming a Decentralized Autonomous Organization (DAO). INST token holders would be able to vote on protocol upgrades, new features, and allocation of ecosystem funds. The INST token is also part of the protocols’ Grants program, where contributors and developers can apply for funding in exchange for services.

The classification of INST according to the ITC:

Instadapp Tokenbase entry and classification according to the ITC
Figure 3: The INST Tokenbase entry (Source: https://itin.itsa.global/JV9DFTDG4)

The International Token Standardization Association (ITSA) e.V.

The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.

  • The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
  • The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to the market capitalization of classified tokens.
  • ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.

Remarks

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International Token Standardization Association

International Token Standardization Association

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The International Token Standardization Association (ITSA) is a not for profit organization working on holistic market standards for the global token economy.