"We Need to Democratize Access to DeFi": DeFiZap's Nodar Janashia
Most liquidity in decentralized finance is coming from VCs, Janashia says.
Hello Defiers! This week’s interview is with DeFiZap founder Nodar Janashia. DeFiZap wants to create a one-click experience for DeFi, reducing the number of steps involved in deploying your funds into decentralized finance protocols, with the goal of making investing easier for the masses. Nodar is bursting with ideas for his barely one-month old project — gas-less Zaps! private Zaps! anti Zaps! insured Zaps! He lays them all out, and says which he expects will come first. He talks about how he plans to make this four-person hackathon project into a sustainable business, his focus on education, and plans to start making sure DeFi liquidity doesn’t come only from VCs.
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Camila Russo: Tell me about your pre-crypto life, I understand you come from a financial background? Also, where are you from and where are you based?
Nodar Janashia: I'm originally from Ukraine and half Georgian, and came to Brooklyn when I was 12. I've always been interested in finance since even before high school. During high school I got an internship at EY, which is one of the big four accounting firms, and they've been doing things in crypto too. I tried to get a CPA after that, but then I saw no need to get a CPA license per se. So I continued working at BDO while in college. After that I joined a budgeting and forecasting software company. I spent two years onboarding CPA firms and businesses that wanted to implement our software, which would build financial forecasts for them.
CR: So what led you to Ethereum and crypto in the first place?
NJ: I kept hearing my friends talk about it, but then I saw this video on Vice, explaining how proof of work works. I was blown away. It basically revolutionized the double entry accounting system in my I view, so this is a system that's been implemented in the 15th century and we're kind of still using that same fundamental system to check ourselves. The proof of work mechanism replaces that. That's why I was like, okay, I have to contribute to this space. As they say, I fell down the rabbit hole. And when I saw the DeFi movement start coming up last summer, I started following, all the projects very closely and started making DeFi Tutorials.
I just wanted to bring value to the ecosystem and I started looking at what was the most viable project for me to join and continued making DeFi Tutorials. I started getting feedback. One weekend I hacked up this other tool called DeFi Strategies. You can go to DeFiStrategies.com –I started buying all these domains– it was a trading simulator that helped you experience these tools, Compound, TokenSets and others, without actually putting in your money. And then people there were like, Oh, I thought I would be able to place these trades, because I had them there, in a bundle, like DeFiZap is now. From there, that's where the idea of DeFiZaps formulated. This was obviously a big undertaking. So I needed help with smart contracts. And I saw Kyber's hackathon at this time.
CR: And at this time were you still working at the software company?
NJ: No, I actually stepped off from the day to day of that software budgeting and forecasting company about like three years ago. I started an accounting marketplace. I made a lot of connections working at that software company with CPAs and small businesses. I saw a big disconnect in how they were finding each other in the ecosystem, especially startups were wasting a lot of time and money. So I onboarded 300 CPAs into this online tool that we created and basically we used Stripe for payments. And this is something I actually also want to implement within our ecosystem, but all in due time. But yeah, so startups will come on our website and answer a couple of questions and we connect them with the on-demand CPAs.
CR: Got it. So, so you were working at this company at the time you, you were also launching DeFi Tutorials and DeFi Strategies?
“Holy hell, we won”
NJ: I started spending my full time in crypto in late 2017. That's when I made a leap and stepped away from the day to day operations because everything there is basically automated and we have other partners who are working on it.
CR: So that's where you started mining ETH, then doing DeFiTutorials and DeFiStrategies, and then thought of DeFiZap from this idea of bundling strategies and people wanting to actually implement this but not being able to. Is that when you went to the Kyber Network hackathon?
NJ: Yeah, exactly. That was a great summary there. So it was like two weeks before the deadline for the hackathon and I reached out on Discord, and Dipesh almost immediately reached out to me. He also has a CPA background and two years ago he made a leap and stepped away from being a CPA. Last year he was learning from a ConsenSys bootcamp and this year he was teaching it. He's also a very nice hustler. So immediately we started working on DeFiZap and holy hell, we actually ended up winning that the hackathon. And I think it was because of this user experience that the space is missing.
A lot of people, even those in this space for a long time, they're not aware of everything. Some people are having a hard time coming out of liquidity pools once we got them in. They're on the swapping feature in Uniswap and they're not even aware you have to go into the pooling section and click on remove liquidity. Many of the strategies available could be packaged so it's interesting what we are coming up with and people are excited about it.
Image source: Medium
CR: When was the official launch of DeFiZap?
NJ: The very first Zap was launched on the live mainnet, was actually LenderZap and that's what we launched for the hackathon. We didn't want to launch a bunch of Zaps because security was our priority, so we didn't want to rush things. It was a soft launch to test things out. We started actively encouraging deposits with the new UnipoolZap, which was on December 9th, so literally one month ago.
CR: Crazy it was just one month ago. What kind of traction have you seen since then? Number of users, volume?
NJ: So far we have, over 3,600 ETH deployed into DeFi, 244 unique users, 705 Zaps, saving users 3,631 transactions. Because as you know Zap eliminates all those manual steps that you have to do each time. That adds up to a total of over 60 hours saved for our end users. [The interview was two weeks ago, number have now increased to 5,300+ ETH; 1,000+ Zaps; 10+ hours saved] It's fast for the first month especially since were are not coming with any kind of funding behind us.
CR: So up until now, the only funding you have got was the $5,000 from the Kyber hackathon?
NJ: Yeah. DeFi Tutorials have been free too. I’ve been working for free for awhile. I think the community is finally realizing the value in these things. We have a Gitcoin grant out and we've seen some good contributions from the community. So we're very thankful.
DeFiZap Business Model
CR: In the longer term, what kind of business model are you foreseeing for this?
NJ: So right now all these entry Zaps are free. We help people get in and we're already having people saying “you should be charging for this, I would happily pay a fee.” But we need to democratize access to DeFi and entry Zaps have to be free. So we will start experimenting with some premium features, some premiums Zapps. So I'll tell you, one of them is kind of like the Anti Zap, which helps you do the reverse. So you close out all your positions back into ETH or Dai. So you'll be able to come in with ETH and come out with ETH, or come in with Dai and come out with Dai, and track your ROI very clearly.
We have other cool things like arbitration Zaps and insurance Zaps. So if you need the insurance coverage while doing this, that's something you'll pay for. Pool bridging too: Because volume may start dropping in one pool and exploding in another one and people might want to quickly switch between them, so it would be one-click switch between pools. And then in terms of this whole leveraged liquidity pools, we're very excited to keep experimenting with that.
The coolest part about these leveraged pools is that it eliminates impermanent loss on the way up while increasing the loss of the way down –it's really for the bulls– while still retaining 66% of your Uniswap fees. So what we're going to do is we're going to also have a short leveraged pool, so if you're bearish, you could eliminate the loss on the way down, but of course increasing it on the way up. So yeah, there's a lot of cool things to experiment with. Also, things like using the Unipool tokens themselves as collateral. Right now we're collateralizing ETH, but we could also be eventually using the Unipool tokens themselves.
Next Zaps Coming Up
CR: It seems like the combinations can be endless, between all these platforms and tokens.
NJ: It's important to not throw everything at people. We're keeping education at the core of our approach. We still have to do a lot of brushing up and we're going to keep getting feedback and we're going to make updates. But education has to be at the core of everybody's approach here because you're dealing with financial products that people don't even know what they do in the traditional world exactly, But now you're coming up with brand new use cases here.
CR: Okay so you're planning on having some of these Zaps, maybe the more complex ones have some kind of fees attached to them. Is that right?
NJ: Yeah, exactly. It could be a fee based on percentage, it could also be you get a flat fee for using a Zap X number of times. A couple of cool things coming up for sure.
CR: Are you planning on, on reaching a certain number of users before you start launching these new strategies? Or are you ready to quickly start rolling them out
NJ: These things will come very soon actually. We're planning to launch Anti Zaps very soon. It's been the most requested feature. There's also a lot of sort of integrations, a lot of wallets providers. Pools.fyi for example, they've launched a direct integration. If you go on their website, you could actually add liquidity directly from their website and it would be done by DeFiZap.
Our main focus is definitely to keep doing what we're doing, which we have very nicely organized. And the process that we have is very data driven approach. So what comes out next will be based on analytics.
CR: In terms of financing rounds, are you also talking to VCs or are you not planning on raising funds this way?
NJ: Yeah, we're definitely exploring some options. For now we're a very lean team. It’s just four of us. I'm based in New York, a Dipesh is in Singapore, there’s one person Mumbai and another one in Alberta. We've all never met in person. But at the same time we do want to accelerate our efforts. So we're wrapping some things up, like creating a deck and joining community efforts. For example we joined MetaCartel, they also gave us a grant, and like I said, the Kyber hackathon and Gitcoin. So super grateful to the community sharing the wealth.
CR: It's interesting to me that you're a non developer, but you're still leading this very technical project and won a hackathon with a couple of team members, and that you were encouraged to join this very developer centric community. What would you tell kind of non-programmers looking into DeFi and Ethereum? How hard or easy was it for you to understand the basics and kind of program on some level?
NJ: I'll tell not only non-programmers but also existing programmers that are in this space, the very first thing you have to do is get an MVP as soon as possible and there is a bunch of no-code tools available for you for you to start gathering user feedback before you waste a lot of resources. I have a couple of workshops actually coming up in New York city that I'm organizing where I'm going to be teaching to quickly make these no-code MVPs the way I did with DeFi Strategies, which I literally did in a weekend. There's a no-code movement and there's a lot of powerful things available that you can start gathering user feedback from. Eventually what we're going to have with Zaps is you can have scripts to drop into these no-code tools. We want to explode the movement of people hacking up these MVPs quickly.
DeFi Legos Risk
CR: I'd love to see something like that. I also wanted to touch on what I wrote on my posts about the risk of layering all of these platforms together. How risky do you think it is and what ways are there to mitigate it? Because you're taking on Ethereum risk on top of MakerDAO risk, on top of Uniswap risk. Do you think that's case, are there ways to make it less risky? What are your thoughts on that?
NJ: Yeah, for sure. So the first thing is that, when you're using DeFiZaps to get into DeFi, we're not locking the funds in a separate pool and then taking a position on these other platforms. It’s the same thing as if you are going to manually interact with Uniswap, manually interact with Compound, manually interact with Maker, and so on. So we're just reducing the steps but the end result is you always get back same minted liquidity and position tracking tokens you would have got.
DeFiZap doesn't help you get into like top 10 coins on CoinMarketCap, is what I always like to mention. We help you get into DeFi, get into financial products that are built on top of Ethereum and furthering user adoption within our space.
So in terms of the risk, the added risk, you have to watch the positions that you're getting into. With Zaps, you could potentially hedge some of those risks, but the smart contract risks will always remain there. So just like if you were manually interacting with Maker, and something goes wrong with Maker, that's the risk you're facing. But that's why we're introducing Insurance Zaps. So if you're too worried about that, you could insure yourself against smart contract risk. We're going to integrate with Nexus for that. We're working with their team right now about things like blanket insurance.
CR: Cool. So how would that work? Like would one Zap cover you against multiple contracts?
NJ: All the contracts that you're interacting with that are included in that Zap, you get coverage. If you're going through Uniswap, Kyber and Maker, you'll get coverage for all those contracts that you're interacting with, like bundled insurance. You can think of it as like, a check mark if you want to add on the insurance coverage during the checkout. If you want to add insurance, you click to pay for that.
CR: Awesome idea. When do you expect to add it?
NJ: We're working closely with the Nexus team so hopefully soon. A lot of people want that, especially the newcomers.
DeFi for Those Who Need it
CR: To wrap up, I wanted to ask you about your opinion on the broader DeFi space. What's kind of the most exciting thing, or the most interesting thing that you're seeing right now or that you're looking forward to?
NJ: It's definitely to keep experimenting with a bunch of ideas we have and different interesting opportunities within DeFI. Meta transactions is one, so gas-less Zaps, so you don't need to have to spend money on gas. And people really care about privacy, so eventually have private Zaps.
CR: Very cool. What's you bigger view of where this space is going. Where do you see DeFi and DeFiZap in the next 10 years.
NJ: Once this gets prolific enough we’ll shoot for being like the Betterment of DeFi. Trying to be a gateway for traditional funds to get into DeFi basically. Eventually, I want to utilize the network of CPAs to provide financial help to whoever needs it. Once new people start coming on and the space really starts getting a lot larger, we'll need professional financial advice for whoever it needs it. That's just throwing ideas around. I think projects are pivoting everyday. So we're definitely staying flexible, 10 years is a long time.
CR: What place in the world do you see for DeFI? Who will the users be?
NJ: So right now, most of the liquidity, where is it coming from? It's coming from VCs, honestly. They're the ones making all the interest, or most of it. We have some plans with some interesting partners that we're going to announce soon that will start infusing DeFi into other parts of the world where I think it's more necessary and giving them those opportunities very easily. That’s one of the things I’m most excited about.
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money.
About the author: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.