This proposal describes the upcoming Flashloan Aggregator and sets forth the fee for use of the Flashloan Aggregator
Instadapp is the largest user of flashloans in the entire Decentralized Finance market. We have completed over 35 Billion USD in flashloan volume. Flashloans are a unique financial tool that was created and is only possible in DeFi. Flashloans work particularly well in DeFi because of the friction associated with different DApps, mainly lending protocols, which have high barriers for value transfer. The most common issue is the overcollateralization necessary in trustless protocols. Similarly, utilizing gas and the overall friction of moving assets between protocols is also disjointed and cumbersome.
In the past Instadapp has utilized different flashloan providers, most importantly we have utilized flashloans provided by DyDx for many years and we are grateful to have had such great access to free flashloans! You can read more about DyDx and their decision to migrate their platform to layer 2 and ending their Layer 1 services here. Flashloans offer immense utility within DeFi protocols and allows Instadapp to bring greater value to the ecosystem as a whole by enabling efficient value transfer. As the leading protocol of flashloan usage it should come naturally for us to want to utilize and develop flashloans and their capabilities further.
The first component in shifting and improving our flashloan services is to better connect the overall flashloan market and services. Instadapp has completed development of our upcoming Flashloan Aggregator. The Flashloan Aggregator will find and utilize the best rates for flashloans across a variety of protocols and allow us to provide our popular strategies and other complex functionality at competitive prices. The Flashloan Aggregator operates similarly to other aggregators you know like Paraswap or 1inch. The Flashloan Aggregator will utilize a variety of sources to route you accordingly for maximize efficiency. The Flashloan Aggregator is upgradable and can be configured to include additional flashloan sources as they become available.
The Instadapp Flashloan Aggregator also features Advanced Routing capabilities. Advanced Routing allows us to expand the capacity and asset availability in the Flashloan Aggregator by utilizing lending protocols to access additional liquidity. This emore competitive routing options and better rates. For example lets say you wanted to migrate a large COMP position however due to the size of the position no single flashloan source has enough COMP for the migration. The Flashloan Aggregator can still accomplish the migration by utilizing Advanced Routing the Flashloan Aggregator will source COMP from Compound’s lending protocol by generating a flashloan deposit on Balancer and Maker.
We have developed Advanced Routing on Maker, Balancer and Compound allowing us almost unlimited capacity for assets listed in these lending market. We will continue to develop Advanced Routing as more Flashloan sources and Lending markets are made available.
Instadapp will also provide and serve as the 4th flashloan provider. Instadapp will manage a Flashloan pool which will be utilized as a source for the Flashloan Aggregator along with the other providers. In many cases we will be the most competitive and most price efficient flashloan provider. Instadapp Flashloan liquidity will start with the most liquid and most used assets such as: ETH, WBTC, USDC, DAI, USDT.
In the future, users will also be able to participate in the development of these liquidity sources by providing liquidity through the upcoming Liquidity Framework enabling users to also interest in the form of flashloans fees. Our internal flashloan service will also strengthen our interchain offerings enabling us to provide flashloans on any network and subsequently advanced strategies and familiar Instadapp services.
Instadapp is currently utilizing flashloans provided by AAVE. AAVE charges a fee of 0.09% or 9 Basis Points (bps). The Instadapp team believes a small fee is reasonable and will provide growth and value to our ecosystem, we believe a range between 2.5-10 bps is reasonable and we can be very competitive at 5 bps. This fee is for the overall use of the Aggregator. The fee set by Instadapp Governance will act as the fee minimum. Please see the following for some examples.
- Flashloan provider charges 0.02% for Flashloan, user pays 0.05% in total
- Flashloan utilizes Advanced Routing the user pays 0.05% in total
- Flashloan Provider charges 0.09% which is higher than our set minimum. The user pays the 0.09% in total to that specific provider.
A snapshot vote will follow this proposal. The Snapshot will determine the Flashloan Aggregator Fee set by Instadapp.
Instadapp’s platform will continue to make development into flashloan technologies and improve our DeFi offering through the introduction of our Flashloan Aggregator and Advanced Routing capabilities.These services combined with our in house flashloan pool will greatly improve our value transferability and enables Instadapp to quickly integrate its full suite of services on any network making the protocol more self reliant. A Snapshot vote will be used to determine the initiate fee set for use of our upcoming Instadapp Flashloan.