Investing in InstaDApp
The gateway to Web3 financial products
This morning InstaDApp announced that they raised a $2.4M seed round led by Pantera. I’m really excited to have played a small part of the round.
I first chatted with Sowmay and Samyak in March — in the six months since that conversation, they have been on an absolute tear, going from <$1M to $30M+ locked in their smart contracts. I’m still blown away that they accomplished this with close to zero outside funding.
Financial Services in Web3
Many breakout Web 2.0 consumer fintech companies created huge value by abstracting away complexity:
- Robinhood (6M users) makes it easier and cheaper to trade stocks
- Wealthfront ($20B AUM) automates and lowers the cost of complex (but effective) investing strategies
- Challenger banks like Monzo and N26 (5M+ combined users) aggregate services that were historically adjacent to consumer banking (paying bills, currency conversion) into a single, mobile-first interface.
Web3 may change a lot about internet architecture, but humans will likely remain the same — and people hate complexity (especially around money). Web3 financial products are complex — sending money to a friend involves a multi-step process ending with an irreversible transaction to a 42-character long indecipherable string.
Given all of this, it shouldn’t be surprising that usage of most Web3 products remains fairly trivial. While decentralized financial (DeFi) products have grown at a tremendous pace dollar-wise over the past few two years, the number of people actively using these products is almost certainly well below 100,000. DeFi protocols also operate in a fairly narrow environment — unless you already have a lot of ETH, these products are just not that useful.
While it’s early days, I am really excited about decentralized finance and think that cryptocurrency will underpin a new financial system. I believe that the interoperable and open-source financial primitives that are emerging — lego blocks if you will — will lower the cost to building financial products and make it much easier to compete with incumbents. There are a lot of open questions — finance is highly regulated, onboarding new users into Web3 remains challenging, and identity/reputation are unsolved. However, I am convinced that something meaningful will emerge in the space.
Making DeFi Useful
InstaDApp has a huge opportunity to build the gateway through which people access decentralized financial products. Most DeFi users today still interact directly with protocols—this limits interoperability and is generally a pretty bad user experience. InstaDApp is positioned to onboard millions of users into Web3 financial products, help them navigate these protocols, and abstract away underlying complexity.
InstaDApp has already proven that they can simplify the process of navigating DeFi protocols and help users optimize their finances. Indeed, their release of a bridge between Compound and MakerDAO coincided with a huge spike in the value of ETH locked in their smart contracts. There are still a ton of challenges for building in DeFi — fiat onboarding, protocol risk, smart-contract bugs. But I have full confidence that the InstaDApp team will continue to ship things people want.
Congrats Sowmay and Samyak — I’m excited to be along for the ride. If you’re building products to make DeFi more useful, I’d love to chat — reganbozman on Telegram.
These are my personal views and not those of CoinList. This is not legal or investment advice.
