Decentralized smart wallet protocol Instadapp is taking steps to automate a number of DeFi functions to safeguard against collateral liquidation due to market volatility.
In partnership with the Gelato Network, the DeFi management platform has launched a new service called Instadapp Actions. The new offering will enable users to access automated debt refinancing between various DeFi lending protocols to prevent costly collateral liquidations.
Instadapp offers a wallet to manage assets across a number of leading protocols such as Compound, Aave, Uniswap, and Maker. Gelato is a tool for developers to automate Ethereum smart contracts.
Instadapp in Action
Due to the volatile nature of crypto markets, asset prices can crash wiping out billions in a matter of minutes. In the DeFi sector, this can result in under-collateralized loans and liquidations (which is exactly what happened to MakerDAO in March 2020).
Instadapp Actions offers a solution that will automatically refinance debt and helps portfolios reduce their liquidation price, alleviating the stress over volatility.
DeFi users will benefit from paying the lowest possible interest rates on DAI debt on MakerDAO while capitalizing on significantly lower collateral requirements on protocols such as Aave and Compound, the blog post explained.
Co-founder and CTO of Instadapp, Samyak Jain, stated;
“I believe refinancing automation will be one of the most used features to secure ETH-A vaults as it saves users from liquidation without selling any Ethereum. Automating Instadapp’s DeFi smart accounts with Gelato will enable many more equally powerful use cases in the future.”
The Gelato Network of decentralized bots will refinance positions, monitor prices, and automatically react to changes in the price of Ethereum.
Instadapp Smart Account assets will move autonomously between the most liquid lending protocols based on where the most favorable liquidation prices are for debt positions, it added.
Gelato’s Matthieu Marie Joseph said that decentralized automation is one of the missing pieces of DeFi and blockchain today. Instadapp was one of the first to support Aave protocol migrations in December 2020.
DeFi TVL Hits ATH
As a number of crypto assets hit record prices, the total value locked across the DeFi sector has also surged to a new all-time high. According to DeFi Pulse, TVL is currently just shy of $33 billion, an increase of 112% since the beginning of 2021.
Instadapp currently has around $245 million in collateral locked up, though it’s down from its peak TVL of $325 million in August 2020. It’s currently ranked seventeenth in the DeFi TVL charts.
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