This short post analyses how Zap transactions grow deposits and TVL. We will look at the on-chain data of three large DeFi protocols.
A quick reminder of what Zaps are: Zaps bundle several transactions into one to enable single click deposits (or withdrawals) which leads to improved conversion and more TVL. For example: If you have ETH and want to deposit it to the Yearn Curve stETH vault, you will have to execute five transactions to get the desired Yearn Curve stETH token. With Zaps, it takes a single transaction to deposit ETH into the Yearn vault.
Additionally, Zaps offer other advantages on top of bundling several transactions into one:
The simplicity of Zaps is enormous; hence, it's been very popular for users and is clearly visible in the data below.
Curve.Fi is an exchange liquidity pool designed for a highly efficient stablecoin swap. Users can add liquidity to the pools and earn fees. Users can deposit all the pool tokens to keep the pool balanced or Zap into it with a single underlying pool token. We looked at 166 Curve pools on Ethereum available on Dune and compared the ratio between Direct and Zap transactions.
An absolute majority of Curve users prefer to use Zaps vs direct deposits.
Beefy is a yield optimizer. Their main product is Vaults which grows users' deposited tokens through a set of strategies. Beefy maximizes rewards from various liquidity pools, AMMs, and yield farming opportunities. Beefy has been building Zap contracts for most vaults on their platform.
Zaps on Beefy allow users to deposit any underlying token of LP and automatically swaps for the other token, adds liquidity in equal ratio to the QuickSwap pool, deposits the LP token to Beefy vault and returns the vault token to the user. We looked at the data from all QuickSwap vaults on Polygon.
You can see that there is a growing share of transactions preferring to use Zaps over Direct deposits on Beefy.Finance.
Yearn is also a yield optimizer and works similarly to Beefy. Yearn also provides Zaps for their vaults. It allows users to Zap popular tokens into the vault and internally performs a DEX swap, depositing into Curve and then depositing into the Yearn vault. Below we look at data from all the Zap-supported vaults on Ethereum.
Zaps make a significant portion of the deposits to Yearn, averaging 40%.
Zaps are popular amongst users. And that's why Curve, Beefy, Yearn, and others have built their custom Zap contracts.
But building custom Zap contracts is work.
Wido is a multi-chain Zap infrastructure. Protocols can integrate Wido SDK to add support for zaps into their farms, pools or vaults.
Wido universal Zap contract works with all protocols and pools, enabling users to deposit any token they have. Wido Zaps also work cross-chain, letting users deposit into farms on other chains with a single transaction.
Creating a new Zap using Wido does not require smart contract deployment and audit.
With all that, we expect Wido Zaps to drive deposits even further compared to what you see in the charts above.
You can try out a demo for any-to-any token Zaps here.