28.11.2021

How do DeFi aggregators work and what are their benefits?

If you actively use Decentralized Finance (DeFi) – trading on Decentralized Exchanges (DEX), using liquidity pools or doing income farming (Yield Farming) – then you know how difficult it can be to track all transactions and calculate the profitability of all transactions.

Fortunately, DeFi aggregators do a great job with this problem, making life much easier for their users. Such platforms allow you to manage your investment portfolio, buy and sell digital assets at the best prices, and monitor projects on the DeFi market.

Let’s understand how DeFi aggregators work and find out what exactly the market leaders – Zerion, Zapper and DeBank – offer.

How do DeFi aggregators work?

DeFi is one of the fastest growing areas of the crypto sector. Over the past two years, hundreds of new products, protocols and services have been launched, including decentralized exchanges, credit protocols, and liquidity pools.

However, as the sector grows, it becomes more difficult for its members to keep track of all the products available. So, in order to become a liquidity provider to pools, users must manually switch between different credit protocols and DEX, for example, between Uniswap, Aave or Compound. Moreover, they have to independently compare the best interest rates, search for available tokens and manually transfer their funds from one digital asset to another.

Even in such popular wallets as MetaMask, or through the Etherscan blockchain explorer, it is not easy for the user to track all the tokens and transactions in DeFi. After all, most wallets do not recognize complex transactions, such as those that occur during SNX staking, supplying liquidity to Uniswap, or using MakerDAO storage.

Therefore, recently, DeFi aggregators have become especially in demand on the crypto market – platforms that show the balance and transactions of the user of DeFi protocols in one interface, and also allow transactions in them. They help the user to manage their investment portfolio, which includes tokens from different DeFi protocols, in real time. This means that in DeFi aggregators you do not need to independently enter data about transactions, as is done, for example, in the Blockfolio application.

DeFi aggregators allow you to access the balance of the investment portfolio, transaction history, earned interest from providing liquidity, the state of vaults and open loans, among other things. They also show the value of digital assets on different DEXs – the user does not need to search for anything himself.

At the same time, DeFi aggregators are very easy to use. It is enough to indicate your Ethereum address, and the aggregator will show all transactions and assets of the user, as well as commissions and profits for each operation. Usually, to find out how much interest a user earned in the liquidity pool of the Uniswap decentralized exchange, he needs to go to the pool page, check his share in it and calculate the income at the market price of each token. In the aggregator, you just need to select the appropriate pool of liquidity – and the platform itself will carry out all the calculations for you.

Popular DeFi aggregators support dozens of the largest DeFi protocols, which also greatly simplifies DeFi token trading. And some of them also offer DeFi simulators: the user can first calculate the profitability and investment risks in a test environment and only then make a real deal.

But the benefits of DeFi aggregators don’t end there either. Such aggregators allow you to save on gas when paying for transactions on the Ethereum network. Without an aggregator, in order to move funds from one DeFi project to another, you need to log into each of the services used, constantly switch between several protocols and perform numerous transactions. But with the help of DeFi aggregators, users can perform many actions within a single transaction, as well as move capital between different liquidity pools in a few clicks, reducing the number of transactions and, accordingly, the number of commissions for them.

Thus, after the user connects the wallet to the DeFi aggregator, he will be able to monitor the assets in his portfolio, exchange tokens of various protocols, transfer them to liquidity pools and participate in income farming. All that is left to the user is to find the aggregator that best suits his specific needs.

Review of TOP-3 DeFi aggregator for 2021

Let’s take a look at the most popular DeFi aggregators on the market: Zerion, Zapper, and DeBank.

Zerion

Zerion is one of the most popular and time-tested DeFi aggregators.

This platform makes it much easier to trade DeFi tokens: the app receives liquidity from large decentralized exchanges, which allows Zerion users to exchange tokens and send them to other crypto wallets in just one transaction.

Zerion interface

Zerion was founded in California in 2016 by Russians Vadim Koleoshkin, Alexei Bashlykov and Evgeny Yartaev. For 5 years of work, this project has established itself as a reliable service provider and has rightfully become one of the most popular DeFi aggregators. Zerion is now used by over 200,000 people worldwide.

Zerion supports over 60 DeFi protocols, 13 fiat currencies (including the ruble), and over 50 digital assets. Application users can invest, provide loans and borrow various digital assets. Most of the popular top DEX tokens are available on Zerion.

To start using the service, you just need to connect one or several ETH wallets to it. Zerion supports MetaMask, Ledger, WalletConnect, Trust Wallet, Coinbase Wallet, and Fortmatic. You can also use Zerion through a browser or a mobile application for iOS and Android devices. You can also register in the application via e-mail or through social networks.

Funds are deposited through a wallet on a crypto exchange, a personal Ethereum wallet or a bank card and the MoonPay service. But you can only withdraw cryptocurrencies and tokens to an Ethereum wallet.

Zerion has a simple and straightforward, partially Russified interface. In the personal account, the user has access to tabs with all the features of Zerion, such as transaction history, exchanges and deposits, among other things. Let’s consider them in more detail.

Wallets at Zerion

In Zerion, at the top left, you can see which wallet is connected, and you can add additional wallets there. On the left pane: all available functions. The top right corner shows the value of all assets in the selected fiat currency.

History.  This is the user’s transaction history. The feed can be filtered based on asset, protocol, transaction type, or address.

Investments. Here, the user can buy various DeFi assets, including DeFi indices, NFTs, and decentralized exchange tokens. As a reminder, Zerion supports over 60 DeFi protocols. When the asset price changes, the platform will send a push notification.

Examples of assets available for purchase on Zerion

Examples of assets available for purchase on Zerion

Exchange. Through Zerion, users can buy or sell tokens that are listed on decentralized crypto exchanges such as Uniswap, Kyber, 0x and others. Orders will be directed to DEX with the most favorable current rate.

Most transactions on Zerion are free. However, the platform charges fees for trading and exchanging cryptocurrencies. Fees vary depending on the trading pair.

Liquidity pool. The user can act as a liquidity provider on DEX – this is another type of passive income on Zerion. The user selects the pool in which he invests – Bancor, Uniswap or Curve, and transfers the necessary tokens to them. He can add or remove his liquidity directly through Zerion.

It is also important to note that when providing liquidity to Uniswap, the user needs to have both assets from a trading pair for a certain amount, which is not always convenient. But Zerion has a solution to this problem. The application allows you to transfer only one asset from a trading pair to the pool. And the second may be different – the application itself will exchange for the missing asset. For example, you can provide liquidity to the WBTC / ETH pair via USDT or SUSHI tokens.

Zerion can also track the performance of liquidity pools. The profitability of such investments depends on the value of assets at the time of investment and upon withdrawal, as well as on the size of the pool and the volume of trading in it.

Examples of asset pairs available on Zerion

Examples of pairs of assets available for investment on Zerion in different pools. To provide liquidity, you need to click on the selected pair – and you can start earning on trading commissions.

Deposits.  Users can deposit their stablecoins or other assets into the  Compound protocol and receive interest on it. Interest rates for storing coins and tokens change daily and depend on liquidity in the DeFi market, but on average are 7-10% per annum. In this case, interest is calculated every 15 seconds. When depositing assets in return, the user receives cTokens – internal tokens of the Compound protocol, in which interest is paid on deposits.

Lending.  Users can borrow DAI, SAI, USDT, USDC, ETH, WBTC, ZRX, REP and BAT through the Compound and Maker protocols. The same assets are accepted as collateral during the deposit.

NFT . The NFT trading option has just been announced – it will be added in the future. Earlier, we talked in detail about what NFT is, how the markets for digital art, fan tokens, in-game NFT assets are arranged, and how the sector is developing after the spring hype.

Algorithmic trading. Automated and algorithmic trading is available to advanced traders using the TokenSets system. In other words, Zerion users can repeat the trades of other traders or automatically trade with trading bots according to their chosen strategy.

Airdrops.  Zerion also lets you keep track of all the airdrops (free coin giveaways) you have taken part in. Earlier, we have already described in detail what airdrops are and how to make money on them.

In conclusion, we would like to note that Zerion is not a custodian platform – this means that it does not store users’ funds and their private keys. Considering how often hackers attack DeFi protocols and other vulnerabilities in this sector, this is a very important point to consider when choosing an aggregator.

Zapper

Zapper is another popular DeFi aggregator specializing in working with the Balancer, Curve and Uniswap liquidity pools. It allows you to channel capital to different DeFi projects and switch between them in one click.

Personal account of the user in Zapper: the interface is partially Russified

Personal account of the user in Zapper: the interface is partially Russified.

The Zapper project was launched in May 2020 and is the result of the merger of two other projects: DeFiZap and DeFiSnap. The key goal of DeFiZap is to make it easier to access DeFi assets, and DeFiSnap allowed users to track investment portfolios. Now the best features of these projects are available to Zapper users in one place.

In just over a year, more than $ 4.5 billion was invested through the platform, and the number of users exceeded 500,000. The platform supports 54 DeFi protocols that have been launched on the Ethereum, Polygon, BSC, Avalanche, Arbitrum, Fantom, and Optimism networks.

One of the key advantages of Zapper is the ability to automate all actions and operations. So, the user does not have to search and choose the most profitable opportunities himself – the platform algorithm will independently find the best rates in the pools and offer them to users. The Zapper website states that it is a non-custodian service, which means that this DeFi aggregator does not have access to users’ private keys.

Zapper also combines several transactions into one, which significantly reduces transaction times and gas charges. However, users can enter and exit DeFi positions using features called “Zapping In” and “Zapping Out”. Suppose an investor owns a certain amount of ETH and wants to enter the Uniswap ETH-USDC liquidity pool. Usually, to enter the ETH-USDC pool, the Uniswap user needs to provide 50% ETH and 50% USDC. This means that the investor would have to carry out several additional transactions in order to exchange their ETH for the required amount of USDC and further contribute their assets to the liquidity pool. However, in Zapper, all this can be done in just one transaction thanks to Zaps – special smart contracts for exchanging tokens.

To work in Zapper, you first need to connect one of the 13 supported Ethereum wallets. Next, the service will prompt you to select the liquidity pool to which you want to transfer your assets. Next, you need to select a token and set the amount that you would like to provide to the pool and transfer the assets to the pool’s smart contract. That’s it – then you can get passive income from your cryptocurrency. Zapper does not charge any additional fees – each transaction through the platform will cost the same as any transaction on the Ethereum network.

At the same time, users get the opportunity to use a built-in questionnaire that helps them understand which type of investment is best for Zapper users. This is ideal for first-time DeFi users and those who don’t have time to delve into the intricacies of multiple protocols. At the moment, Zapper only supports the browser version, there are no mobile applications.

Zapper’s main tab functions are very similar to those found in Zerion. So, users have access to functions such as:

Dashboard.  This is a single interface for all user transactions across all connected wallets. There is also the ability to navigate through the transactions. This is much more convenient than manually searching for them in the Etherscan blockchain explorer.

Exchange.  The user can exchange over 2,000 different tokens, represented on over 20 DEXs, directly from Zapper.

Zapper token exchange page

Zapper token exchange page.

Liquidity pools.  The user can provide liquidity to one of the selected pools on the Ethereum, Polygon and BSC networks directly through the Zapper.

As in Zerion, in Zapper it is not necessary to transfer both assets of the selected pair to the pool – one is enough. Zapper will take over the exchange of tokens for the assets the user needs so that he can become a liquidity provider.

Pools selection page in Zapper.

Pools selection page in Zapper

Farming. The user can participate in the farming of income.

Deposits. The Zapper user can make a deposit, deposit it into the credit protocol and earn interest on it.

Zapper is actively developing. The project team is working on integrating new wallets and protocols. There are also plans to develop similar functions in one click for arbitrage, insurance, exchange for fiat money, and more. In May, Zapper raised $ 15 million in a Series A funding round. Actor Ashton Kutcher and entrepreneur Mark Cuban joined the round. This money will go to launch a mobile application and a marketplace for developers.

DeBank

DeBank is another popular DeFi aggregator that bills itself as a universal non-custodial DeFi wallet. Previously, DeBank only provided data on the DeFi market and its assets, but after the addition of the crypto wallet, it became a full-fledged DeFi aggregator.

DeBank interface

DeBank users can track all their transactions across all DeFi projects and exchange tokens across seven networks: Ethereum, BSC, xDai, Polygon, Fantom, OKEx Chain, and HECO. DeBank also allows you to track the transactions of other investors – all you need to do is enter their Ethereum wallets. At the same time, the possibilities of providing deposits and lending are still under development.

DeBank’s key strengths lie in its extensive set of trackable metrics and analytics for DeFi assets, stablecoins, margin trading platforms, and DEXs. At the same time, the DeBank functionality is more modest than that of Zerion and Zapper. Thus, DeBank users can monitor the status of numerous DeFi projects in real time using several metrics. Among the metrics that DeBank monitors, TVL is worth mentioning separately – this is the total amount of funds blocked in the protocol. TVL allows you to assess the scale of the project and the amount of user funds in it.

DeBank tracks data across a huge number of protocols. For example, the popular DeFi Pulse service provides information on 55 projects, while DeBank works with data from 366 DeFi protocols and 585 DeFi projects.

DeBank tracks statistics for four main markets:

  • Credit protocols . DeBank provides statistics on credit protocols in several ways. For example, capital size, total deposits, total borrowings and interest rate, total and details of daily debt elimination on each platform.
  • Stablecoins.  DeBank provides access to stablecoin prices, indicators of trading volume at different time intervals, the share of the coin in the market and the activity of its users;
  • Margin trading . This is data on position size and leverage ratio on three decentralized platforms – dYdX, DDEX and Nuo;
  • Spot trading . Here DeBank users will receive information about the daily trading volume, the number of transactions and users of the main decentralized platforms, as well as detailed information about each transaction concluded in various DEXs.

DeBank main protocol metrics page.

DeBank main protocol metrics page

DeBank is actively developing. The mission of the project is to build a bridge between users of the DeFi sector and bring the benefits of decentralized finance to a wide audience.

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