Join and exit PowerPool indices with 68X Cheaper Gas Costs
In recent months, gas costs on Ethereum have risen to all time highs. A simple ERC20 transfer can cost $30 dollars while a DEX swap can cost more than $100 dollars. For financial products like PowerPool gas costs are typically much higher due to our smart contracts’ complexity.
It can cost $200, $300 (PIPT, YETI, ASSY), and even $800 (YLA) to supply and withdraw liquidity.
Currently, Powerpool is not sustainable for the average user. However, Powerpool is committed to servicing all segments of the defi market and becoming the go-to solution for retail investors interested in a passive investment strategy. To meet our commitment we updated our development strategy to focus on solving this issue.
Our goal is to make the cost of PowerPool products as cheap as possible.
Solutions:
- Allow users to join and exit PowerPool indices with minimal expenses
- Expanding PowerPool operations to other chains
We will make an additional announcement soon regarding the second point.
A gas efficient tool to join and exit PowerPool indices
We have launched a one-click solution that allows users to join or exit indices with only USDC or ETH by leveraging ZAP contracts.
Value proposition
1. Supply and withdraw liquidity using a one click transaction
2. Minimal gas costs: ERC20 transfer + cost of approval transaction
How It Works (PIPT/YETI/ASSY):
Users can deposit ETH and USDC to the special smart contract where funds will be stored. Once every 24 hours the Poker Agent, PowerOracle v2 Price Reporter, calls the ZAP contract and the ZAP interacts with an ERC20 PIPT Swap. The PIPT swap contract is responsible for buying the Index basket for ETH/USDC which is then supplied to the Index. Finally, all users that deposited funds receive Index tokens based on their supplied liquidity.
How It Works (YLA):
YLA is relatively much more complex to join or exit since Yearn v1 Vaults don’t have external markets or liquidity pairs. Currently, YLA is the main liquidity pair for them. Therefore, USDC deposits and withdrawals require USDC to be deposited in five Curve Pools, then deposit these LP tokens in Yearn vaults, and after that deposit these five LP tokens into YLA. This process involves more than 20 transactions in total, counting approvals, and ~$800 in gas costs. Sounds crazy, right?
Just check out this transaction:
https://etherscan.io/tx/0x1d4e974db2d60ebd994410fcd793c5db771af9a14660015faf94cbdaec285009
This transaction cannot demonstrate the full path for the deposit since it was created from Yearn Vaults tokens, but the complexity is obvious.
Typical process to add liquidity into YLA contains 26 transactions and costs ~1ETH according to current gas price
ZAP allows users to take advantage of complex strategies without the laborious process, or paying for them, by allowing users to deposit USDC in one click:
Add liquidity in one transaction with almost zero gas fees. Users need to deposit USDC to the ZAP contract. Every 24 hours, or earlier, if USDC limit is reached, ZAP contract automatically converts USDC to curve.finance LP tokens, deposits LP tokens to Yearn Vaults, supplies vault tokens to YLA, mints YLA, and transfers YLA to liquidity providers. Finally, your address will receive YLA tokens.
Remove liquidity in one transaction with almost zero gas fees. Users need to deposit YLA to the ZAP contract. Every 24 hours, or earlier, if YLA limit is reached, ZAP contract automatically redeems YLA to Yearn vault tokens, redeems Yearn vault tokens to curve.finance LP tokens, and withdraws USDC from Curve pools. Finally, your address will receive USDC.
Quantifying the Savings: Currently, the contract requires 4,500,000 gas units to supply and 4,000,000 to redeem. In comparison, ZAP requires only 66,000 gas units to be spent by an end user.
ZAP allows users to pay only a tiny fraction of actual gas costs ~1.5% of gas or 68 times less!
The final distribution of YLA or USDC costs 202,000 + 65,000*(N-1), where N is the number of wallets for distribution.
Please note that ZAPs execute deposit of users’ funds in one of two conditions:
- The amount of funds on the contract reached the target amount
- The time from previous deposit exceed 24hrs
The ZAP contract for YLA is already launched while the PIPT/YETI/ASSY ZAP will be launched in the coming days.
