Zaps allow you to add liquidity (zap in), remove liquidity (zap out), and rebalance. Rebalancing refers to when someone has money in a liquidity pool (LP) in an AMM like Uniswap or Balancer and they want to withdraw from that LP to another LP.
A simple example is if I have money in the DAI / ETH pool in Uniswap, I can Rebalance that liquidity into the BOND / USDC pool. A Rebalance Zap will do the following magic for users:
1. Withdraw liquidity from the first pool into whichever token causes least slippage
2. Swap that token to one of the 2 token in the new pool (if there's not a token already in common like ETH)
3. Add the new liquidity to the second Uniswap pool to maximize the LP
If you were to do this work above manually, as many DeFi users used to in 2019 and before, it would cost potentially 5-7 transactions. With a Rebalance Zap, you can do all this in just 2 transactions:
1st an Approval (a signature) + 2nd to execute the Zap
Watch below to see how it works!