The DeFi space has seen impressive innovation and traction over the last two years, with the total value locked in the DeFi ecosystem surpassing $9.4 billion in mid-September (DeFi Pulse). As DeFi continues to evolve, DeFi aggregators are emerging as a strong trend. As user-facing products built on decentralized infrastructure, DeFi aggregators unlock the potential for higher yields and a better user experience.
Because returns vary greatly across different lending platforms, aggregators help investors get the highest possible yield. Aggregators played a key role in the recent yield farming craze by leveraging DeFi protocols to maximize user returns. While protocols such as Compound, Uniswap, and others have built out user-facing applications, their priority remains centered on core functionality. In contrast, aggregators focus on simplifying and improving the experience for the end user. For example, in the case of an alternative savings account, users don’t need to worry about the underlying smart contracts or networks; instead, they simply deposit money and watch interest accrue.
Quantstamp is proud to have helped secure some of the industry’s leading DeFi aggregator projects including Idle Finance, Rari Capital, and Yearn:
Idle Finance is a DeFi rebalancing protocol, which tokenizes the best interest rate across different lending protocols on the Ethereum money market. With Idle, users and dApp developers don’t have to switch funds between lending protocols manually. Instead, by buying and holding IdleTokens, a user’s underlying position is rebalanced dynamically each time the lending protocol that is offering the highest rate changes. This allows users to always attain the most profitable return for their savings. Different allocation strategies can be chosen, allowing users to choose between maximum yield or risk-adjusted.
Rari positions themselves as the “Smartest Stable Robo-Advisor,” and is built to maximize yield across protocols such as Compound, Aave, Synthetix, and Curve.
Rari lets anyone with an Ethereum-based wallet access the protocol, lend their funds, and participate in what’s known as yield farming. Funds begin earning interest as soon as they are deposited, with a 20% performance fee being deducted from all yield earned by RFT token holders.
Yearn, a community-driven project, provides a way for liquidity providers to maximize their yield and is intended to be governed in a decentralized manner. After launching their token in July, they experienced unprecedented growth which has shown no signs of slowing down, recently surpassing $900M in Total Value Locked (TVL). Quantstamp worked with the community to provide an informal code review of their Y Pool, Staking, and Governance pools.
DeFi aggregators are already experiencing product-market fit, so they will likely play a bigger role as the DeFi space continues to develop. By unlocking better yields and providing an unparalleled user experience, aggregators are driving DeFi users to various protocols and supporting even greater adoption within the space.