The Rise of InstaDApp

In the rapidly evolving world of decentralized finance (DeFi), a new star has emerged - InstaDApp. Founded by brothers Sowmay Jain (23) and Samyak Jain (21), this innovative DeFi protocol has quickly grown to manage over $5 billion in locked value. Their journey from participating in a hackathon to building a revolutionary middleware solution for the DeFi ecosystem is nothing short of extraordinary.

InstaDApp aims to solve a critical problem in the fragmented DeFi space by creating a standardized middleware layer. This solution not only benefits users but also provides a powerful platform for developers and protocols. As Sowmay explains, "We are trying to build a standard between in DeFi, which helps users, mass developers and protocol developers."

What is DeFi Middleware?

DeFi middleware acts as an intermediary layer between various DeFi protocols, chains, and applications. InstaDApp's middleware solution standardizes the fragmented DeFi landscape, making it easier for users to interact with multiple protocols and for developers to build on top of existing infrastructure.

Samyak draws an analogy to traditional finance, stating, "Stripe built a middleware API or infrastructure, which combines different payment structures, cards, debit cards, and provides that simple solution. In a similar fashion, what we're trying to do is like for DeFi building that same structure where all this fragmented methods, fragmented system, fragmented protocols in DeFi are being standardized in single platform."

The InstaDApp Journey

The inception of InstaDApp can be traced back to the ETH India hackathon in August 2018. The brothers, driven by the desire to simplify the complex process of taking out a loan on MakerDAO, created a solution that condensed 12 different steps into a single transaction. This innovative approach not only won them the hackathon but also caught the attention of the wider DeFi community.

Following their success, the Jain brothers were invited by Kyber Network to Singapore, where they received grants to work full-time on their project. As they continued to build and solve problems, they introduced groundbreaking features like refinancing, which allowed users to move their loans between protocols effortlessly.

Flash Loans and Financial Innovation

One of the key innovations that InstaDApp leverages is the concept of flash loans. These are uncollateralized loans that are borrowed and repaid within a single transaction block. Sowmay explains, "Flash loan is a liquidity, which you can use in a single transaction, as long as you return it back, the transaction won't fail."

This novel financial instrument allows for complex operations like debt refinancing and collateral swaps to be executed seamlessly. For instance, a user can move a $10 million loan from one protocol to another without needing to have that amount of capital on hand. This level of financial flexibility was previously unheard of in traditional finance.

The Power of Composability in DeFi

InstaDApp's middleware solution enhances the composability of DeFi protocols. Composability refers to the ability of different protocols and applications to interact and build upon each other. By standardizing the interfaces between various DeFi components, InstaDApp enables developers to create more complex and powerful financial applications.

Samyak highlights this advantage, saying, "Middleware, every protocol is independent and you can use it in whatever way you want. And the middleware is the way you can connect." This interconnectedness allows for innovation that was previously impossible in siloed financial systems.

Building a Protocol vs. Building a Company

The process of building a DeFi protocol differs significantly from traditional company building. While tech startups often follow a well-trodden path of founding teams, angel rounds, and series funding, protocol development focuses heavily on community involvement and decentralized governance.

Sowmay explains, "On protocol, we need to focus a lot on the community around this platform. First, so right now with traditional investment world at that company, you are distributing your ownership between initial investors or the initial members. But in case of a protocol, you need to distribute those ownership or you need to take that approach where the maximum percentage of your protocol goes to or you have some plans. Like it is going to distribute to the community over time."

This community-centric approach means that many of InstaDApp's contributors are not formal employees but rather community members who help with various aspects of the protocol's development and management.

The Multi-Chain Future of DeFi

As the DeFi ecosystem expands beyond Ethereum to other blockchains and layer 2 solutions, InstaDApp is positioning itself as a crucial bridge between these different networks. The team has already launched features that allow users to move assets between Ethereum and Polygon with a single click.

While the founders believe that much of DeFi will continue to revolve around the Ethereum ecosystem due to its established infrastructure and network effects, they remain open to supporting other blockchains that follow similar standards. This flexibility ensures that InstaDApp can adapt to the evolving landscape of decentralized finance.

Challenges and Opportunities in DeFi

The rapid growth of DeFi presents both challenges and opportunities. High gas fees on Ethereum have led to the proliferation of layer 2 solutions and alternative blockchains. While this expansion offers more options for users, it also fragments liquidity and complicates the user experience.

InstaDApp sees this fragmentation as an opportunity. By providing a unified interface and standardized middleware, they aim to make DeFi more accessible and user-friendly, regardless of the underlying blockchain or protocol.

The Role of Community in Protocol Development

Unlike traditional companies, DeFi protocols rely heavily on community involvement for their development and governance. InstaDApp has embraced this model, with many of their contributors joining organically through social media interactions or by helping out in community forums.

Sowmay notes, "Many people we work with, even we didn't get on a call with them because they are from different areas. They don't understand us. We don't understand. So everything is happening in a so informal way, but it's happening."

This decentralized approach to development and governance is a key feature of many DeFi protocols, allowing for rapid innovation and community-driven decision-making.

InstaDApp's Governance Token Launch

In an exciting development, InstaDApp has announced the upcoming launch of their governance token and portal. This move will further decentralize the protocol's decision-making process and allow token holders to participate in shaping the future of the platform.

The tokenomics will include incentives for InstaDApp users and a distribution plan that will allocate tokens to the wider community over time. This launch represents a significant milestone in InstaDApp's journey towards becoming a fully decentralized and community-governed protocol.

The Impact of Young Founders in DeFi

The story of Sowmay and Samyak Jain is a testament to the democratizing power of blockchain technology and DeFi. At ages 23 and 21 respectively, these young founders have built a protocol that manages billions of dollars in assets, competing with established financial institutions.

Their success challenges traditional notions of expertise and authority in the financial world. As Samyak points out, "The credentials that in defense is not out of age or any previous work you're doing, because everything is out live, out on smart contracts."

The Future of Finance

InstaDApp's vision extends beyond just creating a successful DeFi protocol. The founders see their work as part of a broader revolution in the financial industry. They believe that the future of finance will be global, decentralized, and managed by diverse groups of people rather than concentrated in traditional financial centers.

Samyak envisions a future where "instead of staying concentrated in New York or any specific places, it will be global managed by different people in different areas. And whoever is managing it, good people will get the votes. So they will be the leader."

Bridging Traditional Finance and DeFi

While InstaDApp is firmly rooted in the world of DeFi, the founders recognize the potential for their technology to bridge the gap with traditional finance. They draw parallels between their middleware solution and how it could potentially transform traditional banking services.

Sowmay explains, "If HDFC was open, then anyone can build the UI on top of it. So there will be a lot of UI if there is incentives for the people who are building the UI. And then you can use any UI you like according to the user experience."

This vision of open, composable financial services could lead to significant improvements in user experience and innovation in the financial sector.

The Role of Flash Loans in DeFi

Flash loans represent one of the most innovative and unique features of DeFi. These uncollateralized loans, which are borrowed and repaid within a single transaction block, enable complex financial operations that were previously impossible.

InstaDApp leverages flash loans to provide services like debt refinancing and collateral swaps. Sowmay provides an example: "Let's say if you want to move a loan of $10 million, so you borrowed a flash loan of $10 million, you paid the user depth on one protocol, withdraw his collateral, deposit the collateral into different protocol, borrow 10 million depth and return to the flash loan."

This capability allows users to optimize their positions across different protocols without needing to hold large amounts of capital, representing a significant advancement in financial efficiency.

The Importance of Solving Real Problems

When asked about advice for new developers entering the crypto space, the Jain brothers emphasize the importance of focusing on real problems. Samyak advises, "Go for a problem first, that what problem do you see in the DeFi space or crypto space or any related space? And once that problem strikes you hard, you will find your solution."

This problem-first approach has been key to InstaDApp's success. They started by addressing the complexity of interacting with MakerDAO and continued to build solutions for the pain points they observed in the DeFi ecosystem.

The Evolution of InstaDApp

InstaDApp's journey from a hackathon project to a billion-dollar protocol has been marked by continuous evolution. The founders stress the importance of starting small and iterating based on user needs and market demands.

Samyak reflects on their journey: "We just started very small on a hack and we didn't know like we'll teach here at that time we were just doing the hack and just our team name in the hackathon was instead app. So that's what we carried. But we were just working on a hack and we just simplified that particular thing. And then we realized like the middle where role and then we released the first smart contracts, first batch of smart founders, like first version, then second version and now it's the third version."

This iterative approach has allowed InstaDApp to stay responsive to the rapidly changing DeFi landscape and continuously improve their offering.

The Potential of DeFi for Financial Inclusion

One of the most exciting aspects of DeFi is its potential to provide financial services to those who are underserved by traditional banking systems. InstaDApp's middleware solution could play a crucial role in making DeFi more accessible to a wider audience.

By simplifying complex DeFi interactions and providing a unified interface, InstaDApp lowers the barrier to entry for new users. This could potentially open up sophisticated financial services to people who previously didn't have access to them.

The Challenge of Educating Users

As DeFi continues to evolve and become more complex, educating users becomes increasingly important. The InstaDApp team recognizes this challenge and sees it as an opportunity to improve their product and communication.

Sowmay notes, "99.99% of people are actually even clueless about traditional finance, right? Like how traditional finance works. And now you add this layer of decentralization on top of it, where things don't just get more chaotic, but that can also be incredibly scary."

By focusing on user experience and providing clear, accessible information, InstaDApp aims to make DeFi less intimidating and more approachable for the average user.

The Role of Governance in DeFi Protocols

Governance is a crucial aspect of DeFi protocols, allowing token holders to participate in decision-making processes. With the upcoming launch of their governance token, InstaDApp is set to embrace this model of decentralized governance.

The founders envision a future where the community plays a significant role in shaping the direction of the protocol. This could include proposing and voting on new features, adjusting protocol parameters, and deciding on resource allocation.

The Importance of Open Source in DeFi

The open-source nature of most DeFi protocols, including InstaDApp, is a key driver of innovation in the space. By making their code publicly available, these protocols allow for community audits, encourage collaboration, and enable developers to build on top of existing infrastructure.

Samyak highlights this aspect when discussing how developers can contribute to protocols: "For technical, they can just suggest the changes by creating PR on GitHub. Yeah. So we actually used to check other projects and PR. So we, I mean, the compound, everything is happening through PR. It's being reviewed by the team."

This open, collaborative approach accelerates innovation and helps ensure the security and robustness of DeFi protocols.

The Future of InstaDApp

As InstaDApp continues to grow and evolve, the founders have ambitious plans for the future. They see their protocol as potentially replacing traditional bank accounts in the coming years, providing a more flexible, efficient, and user-friendly financial infrastructure.

Samyak speculates, "I myself think like the instead app can further evolve in future the smart accounts that we have as to replace the bank accounts in future. But it's just uncertain. But yeah, it's like in future in next five to 10 years, then it could compare to bank or something."

While acknowledging the uncertainty inherent in such a rapidly evolving space, the team remains committed to building tools that empower users and developers in the world of decentralized finance.

The Impact of Regulation on DeFi

As DeFi grows in size and influence, the question of regulation becomes increasingly pertinent. While the InstaDApp team doesn't directly address regulatory concerns in this interview, it's clear that their focus on building open, transparent systems aligns with many of the principles that regulators are likely to emphasize.

The ability of DeFi protocols to provide transparent, auditable financial services could potentially address many of the concerns that regulators have about traditional financial systems. However, navigating the evolving regulatory landscape will likely be a key challenge for DeFi protocols like InstaDApp in the coming years.

The Role of DeFi in the Broader Crypto Ecosystem

While much of the interview focuses on DeFi, it's important to consider how protocols like InstaDApp fit into the broader cryptocurrency ecosystem. DeFi represents one of the most promising use cases for blockchain technology, demonstrating how decentralized systems can create more efficient, transparent, and accessible financial services.

As the crypto space continues to evolve, DeFi protocols like InstaDApp are likely to play a crucial role in driving adoption and showcasing the practical benefits of blockchain technology.

Conclusion

The story of InstaDApp is a testament to the rapid innovation and transformative potential of DeFi. From a hackathon project to a protocol managing billions in assets, Sowmay and Samyak Jain have demonstrated how young, talented developers can make a significant impact in the world of finance.

As DeFi continues to grow and evolve, middleware solutions like InstaDApp will play a crucial role in making these complex systems more accessible and user-friendly. By bridging different protocols and chains, InstaDApp is helping to create a more interconnected and efficient DeFi ecosystem.

The future of finance is being shaped by protocols like InstaDApp, and it's clear that the traditional financial world will need to adapt to this new paradigm of open, transparent, and decentralized systems. As we look to the future, it's exciting to imagine the possibilities that these innovative technologies will unlock.

Facts + Figures

• InstaDApp was founded by brothers Sowmay Jain (23) and Samyak Jain (21).
• The protocol currently manages over $5 billion in locked value.
• InstaDApp started as a project for the ETH India Hackathon in August 2018.
• The initial problem they solved was simplifying the 12-step process of taking a loan on MakerDAO into a single transaction.
• They received grants from Kyber Network to work full-time on the project.
• InstaDApp uses flash loans to enable complex financial operations like debt refinancing and collateral swaps.
• The protocol acts as middleware, standardizing interactions between different DeFi protocols and chains.
• InstaDApp has around 15 full-time team members and many more contributors working on a contractual basis.
• The founders envision InstaDApp potentially replacing traditional bank accounts in the next 5-10 years.
• InstaDApp has announced the upcoming launch of their governance token and portal.
• The protocol supports bridging between different networks, such as Ethereum and Polygon.
• InstaDApp is one of the delegates of Compound, holding 30,000 COMP tokens.
• The founders got into crypto in 2017, initially investing in Bitcoin at its all-time high.
• InstaDApp's refinancing feature allowed users to move loans between protocols with different interest rates, significantly boosting their Total Value Locked (TVL).
• The protocol aims to standardize DeFi interactions across different Layer 1 blockchains, Layer 2 solutions, and sidechains.

Questions Answered

What is InstaDApp?

InstaDApp is a DeFi middleware protocol that standardizes interactions between various DeF'si protocols and chains. It provides a unified interface for users to interact with multiple DeFi protocols and offers developers a platform to build more complex financial applications. The protocol currently manages over $5 billion in locked value and aims to simplify the fragmented DeFi landscape.

How did InstaDApp start?

InstaDApp began as a project for the ETH India Hackathon in August 2018. The founders, Sowmay and Samyak Jain, created a solution to simplify the process of taking out a loan on MakerDAO, reducing 12 steps to a single transaction. After winning the hackathon, they received grants from Kyber Network to work full-time on the project, and continued to build and innovate in the DeFi space.

What are flash loans and how does InstaDApp use them?

Flash loans are uncollateralized loans that are borrowed and repaid within a single transaction block. InstaDApp uses flash loans to enable complex financial operations like debt refinancing and collateral swaps. For example, a user can move a $10 million loan from one protocol to another without needing to have that amount of capital on hand, as long as the loan is repaid within the same transaction.

How is building a DeFi protocol different from building a traditional company?

Building a DeFi protocol differs from traditional company building in its focus on community involvement and decentralized governance. While tech startups often follow a path of founding teams, angel rounds, and series funding, protocol development involves distributing ownership to the community over time. Many contributors to DeFi protocols are not formal employees but community members who help with various aspects of development and management.

What is the future vision for InstaDApp?

The founders of InstaDApp envision their protocol potentially replacing traditional bank accounts in the next 5-10 years. They aim to create a more flexible, efficient, and user-friendly financial infrastructure that bridges the gap between traditional finance and DeFi. The team is also launching a governance token to further decentralize decision-making and allow token holders to participate in shaping the future of the platform.

How can developers contribute to DeFi protocols like InstaDApp?

Developers can contribute to DeFi protocols like InstaDApp in several ways. For technical contributions, they can suggest changes by creating pull requests on GitHub. Non-technical contributors can participate in community discussions on forums, suggesting improvements or new features. The open-source nature of most DeFi protocols allows for community audits and collaborative development, accelerating innovation in the space.

What challenges does DeFi face in terms of user adoption?

One of the main challenges DeFi faces in terms of user adoption is the complexity of the ecosystem and the need for user education. Many people are unfamiliar with even traditional finance, and the added layer of decentralization can make DeFi seem intimidating. Protocols like InstaDApp aim to address this by simplifying complex interactions and providing more user-friendly interfaces, but continued efforts in user education and improved user experience are crucial for wider adoption.