Today marked the end of Kyber Network’s 7-week virtual hackathon. With sponsorships from Compound, Chainlink, Synthetix, bZx, Melon and WBTC, it was quite clear that the focus of this hackathon was around building tools to further growth of the DeFi ecosystem at large. The virtual hackathon featured a price pool of $42,500 with over 78 submissions. In this article, we’ll be taking a look at the winning submissions along with the trends followed by the majority of the victors.
The gold prize went to DeFi Zap, a tool that allows you to allocate assets across multiple DeFi protocols in one transaction to save time and gas. Zap is a smart contract that auto-spreads incoming deposits across Compound, Fulcrum, TokenSets and others, based on pre-set allocations.
The platform prompts users to complete a quick survey, gaging their risk appetite and preferences relative to specific digital assets like ether and Bitcoin. Based on your responses, the system recommends one (or a mix) of different Zaps that are most likely to suit your appetite.
In summary, DeFi Zap is interesting in the sense of not only aggregating different DeFi products like InstaDapp, but for helping to further collateralize different positions in a digestible fashion. Stated another way, for users who aren’t too savvy with the different inner workings of each protocol, DeFi Zaps provides a click and point interface to leverage different niche tokens (i.e. sETH from Synthetix or ETH20MA from Set Protocol) in one transaction. In doing so, users not only save time from only having to use one platform, but they also save gas while hedging their exposure to any specific DeFi product.
This year’s runner up prize went to Structured, a tool that allows you to purchase a structured financial product without creating an account or providing any personal information, thanks to the Ethereum blockchain.
At first glance, this product reminded me of Set Protocol, specifically in the sense of leveraging different Ethereum-based assets to outperform the market. What was interesting about Structured’s approach was the combination of different protocol tools that provides more unique positions that what is currently offered on any one DeFi product in particular.
Taking a look at the “80/20 Interest Long” basket, users purchase 40% USDC Interest, 40% DAI Interest, 10% 2x Long ETH, 10% 2x long BTC to make up an 80% fixed income, 20% leveraged position portfolio. This particular basket symbolizes the uniqueness of Structured as follows:
“If the price of basketed Ethereum/Bitcoin goes up, you earn 2x on 20% of your portfolio (via Fulcrum). If the prices reduce by ~50%, then you lose 20%, but make that back up after after 2 to 3 years from the earnings from fixed income DAI and USDC ($) returns loans via Compound Finance.”
In summary, Structured provides a unique opportunity to offset different DeFi opportunities through a singular deposit. Moving forward, it can be imagined that a number of new products will make their way onto the platform if the core team continues development following the hackathon.
People’s Choice: dDAI
While there were a bunch of awesome projects that ended up winning various rewards for either third place or a sponsor-specific prize, let’s take a look at the “people’s choice” winner, dDAI. For those familiar with rDAI, this project essentially allows you to earn interest on your DAI by lending it out on different DeFi products such as Compound or Fulcrum.
What makes dDai unique is that it takes those profits and converts them into different assets of your choice, depending on any given “recipe”. Taking this a step further, these recipes go further than just ether or Bitcoin by leveraging tools like Synthetix to turn your interest into other protocol tokens such as sXTZ (Synthetix’s version of Tezos) or choosing to turn your interest into a margin position to further enhance your exposure to the asset of your choice.
Honorable Mention: DeFi Custody
Let’s assume you’re caught in a tragic accident tomorrow and your family has no clue where you stored your private key. Even worse, they might not even know what a private key is! Thanks to DeFi Custody (aka DC Wallet), users can set up a contract that prompts assets to be transferred to a wallet of their choice after a predetermined amount of time. In practice, this allows users to not only help their family set up their first Ethereum wallet, but also to be designated as the bearer of those assets in the event of a tragic or possible fatal accident.
It’s worth noting that not only did DeFi Custody win the WBTC prize at Kyber hackathon, they also took home prizes at EthWaterloo for their usage of MetaMask plugins, a toolset which allows specific permissions to granted upon the first usage of the wallet. In doing so, the product experience becomes much more streamlined for the user as they no longer need to “approve” the contract to perform specific functions when they are supposed to be performed.
Now that we’ve taken a look at some of the noteworthy projects, let’s take a second to reflect on DeFi composability. For anyone who’s been in the blockchain ecosystem for a few years, we know that cross-chain interoperability was one of the biggest selling points for new infrastructure projects in 2017 (Cosmos, Polkadot, Aion, etc.). What’s interesting about the overarching amount of submissions in this hackathon was the coordination of various DeFi products into new toolkits. Stated another way, many of these submissions leverage specific uses (such as lending on Compound or synthetic assets on Synthetix) to create tailored assets and services that were all relatively intuitive from an end-user perspective.
As we mentioned above, many of these transactions are processed automatically, meaning that an average user no longer needs to know how to navigate and interact with any of these base DeFi products. As such, users can leverage autonomous smart contracts to perform complex DeFi services all in a few clicks.
Moving forward, it’s evident that the narrative of “money legos” is only continuing to grow. In the next year, it’s likely that more and more products will leverage open-source smart contracts to provide automated services that were previously unimaginable.
In doing so, it’s easy to recognize the limitless potential DeFi has to offer when we consider a world in which any range of complex financial products can be easily managed through a universal login.
Cooper is focused on building compelling blockchain products. He currently works as the managing director at Fitzner Blockchain Consulting and is a contributor to DAOs like MetaCartel and Moloch. He is an active member of the Ethereum community and has a strong interest in for-profit businesses such as The Block Crypto and Messari.