Flashloan Aggregator and Instadapp Flashloan Source

Summary

This proposal describes the upcoming Flashloan Aggregator and sets forth the fee for use of the Flashloan Aggregator

Proposal

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.

:zap: Flashloan Aggregator


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.

:railway_track: Advanced Routing

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.

:swimming_man: Instadapp Flashloan Pool

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.

:heavy_dollar_sign: Instadapp Flashloan Aggregator Fee

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.

Example of Fee Cost at 0.05% Minimum

  • 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.

Reason

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.

Vote on Snapshot

Status: Passed :white_check_mark:

Proposal on Snapshot

Last Updated: November 26, 2021
9 Likes

Great proposal, I’m excited! I think that it serves users, INST holders and the platform well. I also like the implication that Instadapp will be able to deploy to other chains/L2’s and use it’s own liquidity pools/framework to create strategies if an existing provider isn’t available.

Personally I think that offering some savings vs Aave on the fee will be good and am looking forward to the vote! Seems like DYDX pools leaving L1 leaves a good gap in the market for us to fill.

4 Likes

This is quite an exciting proposal indeed. I think fee for flashloan should be minimum at first so that more protocols are integrated to use Instadapp’s flashloan.

4 Likes

Just for some clarification: The fee in discussion is only for the Instadapp Flashloan pool, the overall aggregator system at this time does not have an additional fee.

”If the Aggregator uses AAVE you would pay the 0.09% to AAVE and if it uses Instadapp Flashloan you pay the Instadapp fee; depending on the flashloan it is also possible that it could also use a combination of both.”

Update: I was incorrect here see below :arrow_down:

2 Likes

very excited to hear about this good news ! This setup will help instadapp’s flashloan to be competitive and also generate a good cycle for our economic model.

Greetings! Good initiative

This is another great step forward by the team and will deliver more value to the platform over time. I think the proposed range of 2.5 - 10 basis points is good. The platform is operating today with no revenue (and still financially sound), so if we have an opportunity to undercut the competition, let’s do it. We can also keep users happy by charging them less.

I would vote to support any value within the range, but I’ll toss 5 - 7.5 basis points as my initial range.

For now, will these fees be deposited into the Treasury, distributed to team, distributed to INST holders? Just a curiosity question. I enjoyed the discussion around depositing into Treasury and then buying back INST with some of the funds over time, but still having diversified assets outside of INST in there.

3 Likes

At launch, fees will be transferred to Treasury after that community can discuss & decide on what to do with the collected fees.

1 Like

Half of the fees are distributed among INST holders who have blocked tokens in a special pool, the other half is sent to buy out INST on the market and sent to the treasury with subsequent investment for marketing, development and popularization of the project. At the same time, we are listing on the largest exchanges, stocking up on popcorn and watching INST grow :rocket:

1 Like

@Doo_StableNode I actually didn’t describe the fee structure accurately, please see the updated post above for the correct description.

It is much closer to how you described it, being a minimum fee. My apologies for any confusion.

1 Like

Snapshot Voting for this Proposal is Open!

Vote on Snapshot: Set Flashloan Aggregator Minimum Fee

Status: Passed :white_check_mark:

The Snapshot voting period will be open for three days and requires 1m vote quorum to be valid.

4 Likes

Great proposal - increasing the core value that InstaDapp offers. Looking forward to it

1 Like