Disclosure: Delphi Ventures and/or members of our team have invested in UNI, SUSHI, YFI, FARM, 1INCH, Zapper and, Debank. This statement is intended to disclose any perceived conflict of interest and should not be misconstrued as a recommendation to purchase any tokens. This is not investment advice.

 

Key Takeaways

  • Liquidity is the lifeblood of financial markets. As protocols begin competing on technical and capital efficiency, there’s an opportunity for specialized aggregators to help improve the user experience of DeFi.
  • DeFi protocols have $40 billion of locked liquidity, but this is split across numerous protocols. Aggregators pull quotes from each of these protocols and show them to users, abstracting away the need to manually find the best execution terms.
  • There are three core aggregator types: liquidity aggregators, yield aggregators, and UX aggregators.
  • Liquidity aggregators that service DEXes are the most popular aggregators and had a breakout year. 1inch Exchange, Paraswap, and Matcha cumulatively recorded $9.93 billion of volume in 2020. However, 1inch alone has facilitated $9.92 of volume in January & February 2021 so far on the back of its token launch, indicating an acceleration in growth.
  • If liquidity aggregators gain further usage, investors may be forced to re-think their theses. For example, aggregators like 1inch are looking for the be

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