How to Create a DeFi App – Guide of Successful DeFi Project Developing

14 min read
Jul 27, 2022
How to Create a DeFi App – Guide of Successful DeFi Project Developing
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Now, we know that DeFi is a trending concept both in the cryptocurrency world and the traditional financial world. Since it’s an emergent technology, can spend a lot of time and money and have no business results. Though with a right technical partner, you can win with a Defi App and gain benefits. Startup owners can make money in DeFi through lending, earning interest, selling securities, etc. That’s why we put together this practical guide — to help you create a DeFi app and build a solid business around your product.

information is power

What are DeFi Apps: Reasons to Create a DeFi App in 2022

Decentralized finance (DeFi) apps are programs that run on blockchain networks and allow users to trade digital assets. These applications are similar to traditional financial products, but they are built on decentralized platforms and use smart contracts to store information and execute transactions. DeFi apps can be used for trading stocks, bonds, commodities, currencies and other assets on the blockchain.

Here are some reasons to know how to build a DeFi app in 2022:

  • DeFi apps can help solve real-world problems such as climate change and poverty by giving people access to credit on their own terms at lower interest rates than banks charge.
banks vs defi
  • Apps built on top of DeFi protocols offer more features than traditional banking apps, making them more useful and engaging for users.
  • It’s easy to get started because you can use existing open-source libraries and frameworks (e.g., Ethereum). You can even launch an MVP without spending much on development costs.
  • If you have a good idea, you can quickly test it in the market with minimal effort — just create a smart contract that implements your business logic and deploy it!
  • You will not have to worry about fraud or liquidity issues – it’s all handled by the underlying protocols and smart contracts on the Ethereum network or any other suitable blockchain.

The Main Types of DeFi Apps

Platforms on the Ethereum network are creating new applications for financial market users, allowing them to create, trade and lend tokens or other digital assets. Today, users of decentralized finance (DeFi) applications can utilize many different services, including the following:

long list of types

DeFi Banking

DeFi banking apps allow you to manage your money in a decentralized way. You can use these apps to save, invest, and make payments without having to go through a bank or other centralized institution. This can help reduce fees and other costs associated with traditional banking systems.

NFT

Non-fungible tokens (NFTs) are digital assets that have special characteristics such as being unique or scarce. They can be used for trading on DEXs or for collateralizing loans on platforms like Dharma Protocol or Compound.

NFT popularity mem

Borrowing and Lending

This is an app where users can borrow money from a lender and pay interest to the lender. Borrowers may also loan money to other users on the app. A popular example of this is Compound Finance, which allows users to earn interest on their crypto by lending it out to other users on the platform.

Wallets

There are many wallets available for storing different assets on different blockchains. For example, Coinbase Wallet lets users store ERC20 tokens as well as Bitcoin and Ethereum among other assets; while Trust Wallet stores all ERC20 tokens plus more than 20,000 different Ethereum-based tokens.

Decentralized Crypto Exchanges

DEXs are similar to traditional exchanges but operate through smart contracts rather than central servers. This makes them less vulnerable to hacks than traditional exchanges since there is no single point of failure. Popular DEXs include IDEX, ForkDelta and AirSwap.

decentralized mem

DeFi Crowdfunding Platforms

DeFi Crowdfunding Platforms are another hot category. These platforms are typically run by a team or community that owns all the tokens and makes key decisions about how they’re used. They usually have their own native token, which might be used to pay for services on the platform or act as investment opportunities for other users.

DAOs

A DAO is a business that operates without a central authority by using smart contracts and blockchain technology. This means that instead of having a CEO or CFO making all the decisions, everyone involved in the DAO has an equal share in how it operates and how it allocates resources. One example is Aragon, which allows organizations to register their own Aragon IDs on Ethereum and issue their own tokens through smart contracts.

How to Define the Tech Stack for DeFi Application Process?

A good tech stack will help you build a product that is scalable, secure, and easy to maintain. It will also give you more options for future development because you won’t be locked into using one language or framework for all of your projects.

tech stack to create a defi application
  • In how to build a DeFi application, the first step is to DeFine your product. What is it? What are its features? What are its limitations? How will it be used? Who will use it? Why do they need it?
  • The second step is to look at your competitors and their offerings. How do they compare to yours? What features do they have that you don’t? Are there any features that you have, but they don’t?
  • The third step is to look at the market as a whole and see what kinds of products are out there already, what needs could be filled by new products, and how people are using them now.
  • The fourth step is to determine some basic technical specifications for your product: what kind of data does it need access to, how much data does it need access to, how fast does it need access to this data (if at all), what kind of software language would best fit these needs (or even if software is required), etc.

DeFi applications are generally built on top of DeFi protocols like MakerDAO, Dharma, Compound or Kleros. These protocols DeFine the rules and restrictions of the platform and provide developer tools to interact with them. The application layer is where you can customize your product for your users by adding UI/UX components, security features, analytics etc.

customized character

Key Features of a DeFi Applications

Regardless if an application is web or mobile, it should be easy for someone to use and understand. Thus, the main task to build DeFi application is to make a steady navigation through the application and to provide simple interaction with the user. When designing the workflow of an application, developers can follow several strategies:

Decentralized storage

All DeFi applications use an off-chain database to store data. This is necessary because there are not enough on-chain transactions to support the number of users who would want to use them if they were all on-chain at once.

Programmability

Each DeFi application is programmed using smart contracts, which means that everything can be automated and executed without human intervention. This makes it easy for anyone to build new applications on top of existing platforms or even just make simple modifications without needing any technical knowledge at all.

Interoperability

DeFi platforms are usually connected together through APIs, which allows for easy communication between them and lets users transfer funds across different protocols without having to pay fees or wait for confirmations.

Low-Cost Service Provider

Users can avail of their services at low costs compared to traditional financial institutions such as banks or credit unions. This helps them save money while availing of these services efficiently without much hassle.

Financial instrument tokenization

The DeFi applications tokenize assets by creating digital representations of real-world assets like stocks, bonds, gold and other assets that can be traded on the blockchain. This process allows users to manage their assets through a decentralized network rather than relying on centralized institutions such as banks or brokers.

Technical Tips and Development specs

The applications built on top of the DeFi offer an open and programmable financial system. This section covers the technical specifications of the open-source decentralized finance application, along with some best practices to follow.

  • Use the Solidity programming language to write contracts on Ethereum’s blockchain. Solidity has many features that allow you to write complex smart contracts with the confidence that they will work as intended.
  • Use Truffle as your development framework to make your life easier. Truffle simplifies deploying smart contracts, handling dependencies, testing, and much more — all in one simple command line interface (CLI) tool!
  • Use Web3js. Web3js is a JavaScript library that provides access to Ethereum nodes, allowing us to interact with smart contracts from our browser or mobile device (via MetaMask).
JS framework mem
  • It’s important that you choose an SDK that works well with your application so that users can easily interact with it without having to install any new plugins or extensions on their browser or device.
  • Use MetaMask or Toshi to connect to Ethereum. Most developers should be using MetaMask or Toshi rather than connecting directly to geth (the Ethereum client) through their browser.
  • Build for scalability. It’s important to think about scalability from the very beginning so that your application can handle large volumes of users. Make sure to use a proven scaling solution like GrapheneDB or MongoDB.
  • Provide user-friendly UX. Your DApp should be easy to use and understand. Make it as easy as possible for people to understand how it works. For example, make sure all your buttons are clearly labeled with text that explains what they do.

10 Steps to Build DeFi Apps

In this section, we will explore the steps to build DeFi apps. After researching and assessing the latest developments, we can see that blockchain technology is approaching a turning point as a secure trust mechanism.

DeFine the DeFi Apps’ Type

The first step is to define the type before you create DeFi application. First, you need to understand the different types of DeFi apps and their pros and cons. Then, you should choose the type of DeFi app that best fits your business goals and objectives.

Make a Discovery Phase

The discovery phase includes the research phase, which consists of studying all existing DeFi applications available on the market. The goal of this research is to get ideas for new features and improvements for your own DeFi application. You can also learn about competitors’ strengths and weaknesses by looking at their websites or reading their white papers and blog posts. This requires having a strong start, and you can achieve this by partnering with an experienced outstaffing team like ProCoders.

Let's schedule a call to start a Discovery Phase for your project!

What Blockchain to Use?

The choice of blockchain technology is a critical decision for any DeFi app. There are several blockchains that support DeFi, including Ethereum, EOS, Cardano and TRON, and more will be added in the future. You will also need to check if there already exists an open-source library for that blockchain that you can use in your project.

Chose Tokenomics

This step is important because it will help you decide how much money you want to raise in your token sale and what type of token economics would be suitable for your app. For example, if you are creating a stablecoin that aims at being used as a medium of exchange between different cryptocurrencies, then your token should have low volatility and inflationary pressure.

Integrate Crypto wallet

In how to create a DeFi app, this means that users will be able to use their existing wallets to send or receive cryptocurrencies from within your app’s interface. This can include wallets like MetaMask or Trust Wallet (which supports multiple coins), or even wallets built into your own platform’s codebase if you’re creating something more ambitious like a cryptocurrency exchange or marketplace.

build a defi app with the crypto wallet

Work with Oracles

The next step is to work with oracles — agents that provide data about events happening outside of the blockchain ecosystem (like stock prices or weather conditions). These agents are usually third-party services that charge fees for using their API endpoints; however, certain open source options exist such as ChainLink (LINK) and Foxconn Billing Service (FBS).

Design UI/​​UX

It is important to think about the user experience when developing an app. Will users be able to understand how your app works? Do they need any training before using it? How can you make them comfortable using it? These are some questions that should be answered before designing the UI/UX for your application.

Prototyping

Prototyping is an important step in the development process because it allows developers to test their ideas without going through all the steps required for creating an actual product. This process also helps developers identify problems early on so that they can fix them before moving on to production.

Quality Assurance

QA ensures that an application meets its requirements, has no bugs or errors, and performs well under different conditions (e.g., mobile devices). It is necessary to perform QA because it can affect how people use your application and whether they will continue using your application in the future or not.

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Maintenance

Finally, you need to keep your app up-to-date with the latest changes in the ecosystem. This will ensure that users can get the most out of their experience with your product.

Challenges in Building a DeFi App

The development of decentralized finance applications is a challenging task. It requires a deep understanding of the underlying technologies, including blockchains and smart contracts, as well as their limitations. Here are some of the challenges that you may face when developing a DeFi application:

Lack of standardization

There are many protocols and options, which makes it hard to create a stable product that can be used by everyone. With no standardization, it becomes difficult to implement or upgrade components without breaking other parts of the system. This makes it difficult for developers to implement changes in their code base without breaking other parts of the system.

Data sources and APIs

The main challenge is how do you get data into your system? It’s not as easy as just pulling some data from an API like Google or Twitter. You might have to write your own backend software or integrate it with other systems (e.g., a database). This will take time and money.

Performance requirements

Your app has to perform well under a heavy load because it’s dealing with financial transactions and people want their money fast! If you don’t have enough servers or infrastructure capacity, then you could lose money or even ruin someone’s life if they need their payment right away!

app performance

Diversification in various protocols

Developers need to understand various protocols, such as Dharma, MakerDAO, Compound, dYdX and others. There are several approaches to building a DeFi app across these protocols which makes it difficult for developers to build apps that support all protocols.

Different approaches towards governance

Another challenge is that each protocol has its own governance model that may or may not be suited for your use case. There are different approaches towards governance in the DeFi space depending on the project. Some projects allow anyone to participate in governance, while others restrict this to only token holders or users who have a certain amount of tokens locked up.

The solution to these challenges is to find the right DeFi app development team that can help you create an amazing product. They will help you develop DeFi application from scratch, or even improve an existing one.

How Much Does It Cost to Develop a DeFi App?

The cost of developing a DeFi app varies significantly depending on the features, platforms, tech stack and engagement model for the development team. For example, if you need a smart contract that manages multiple assets and currencies, your app will require more time and resources to develop. This is because it involves more variables and functions than other types of apps.

While a simple app can be built for $5,000, complex apps with sophisticated features may cost between $25,000 and $100,000, including web 3.0 developer salary. However, this may vary depending on the number of developers involved in building DeFi apps and the number of hours they spend on it.

defi app development cost depends on the developers skills

The reality is that DeFi apps are more expensive than traditional mobile apps because they require more specialized skills and resources such as smart contracts development, Solidity coding, Web3 API, etc. This makes sense–DeFi is a relatively new technology that has many unique features and complexities, including being built on top of other technologies like Ethereum.

However, you can save development costs and develop a DeFi app even on a lean budget with outstaffing, especially when you offshore your project to the right location. For instance, you can save up to 2 times the cost of development if you offshore your project to an Eastern European country like Estonia than if you chose a US, UK, or other Western developer. Procoders can assist you in saving development costs while delivering good quality and speed.

How ProCoders Can Help With DeFi Application Development

Procoders can assist you with sophisticated developers, skilled and experienced. We provide offshore outsourcing and staff augmentation services for software development to customers across the globe. You can find web3 developers with a team of experienced developers who work with the latest technologies like React JS, Angular JS, Node JS and MongoDB. Our developers can help you create robust applications that are secure, scalable and easy to maintain.

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At ProCoders, we understand the importance of time management when it comes to development projects. We know that once you have decided on a technology stack for your project, you need someone who can get started immediately without any delays or issues. Our discovery phase structure is designed to help developers get started within weeks from when we receive the brief for your project. This will help you to gain faster time-to-market and beat your competitors.

F. A. Q.
How long does it take to build a DeFi app?

If you have a simple idea, it will take you about a few weeks (2-3) to build it. However, if you are building a complex application with many features, it will take longer – a couple of months up to a year for very advanced use cases. DeFi apps are very flexible in that they can be used for a wide variety of purposes and can be customized to fit any company’s unique needs, so it’s hard to say exactly how long the process will take in these cases.

How to Monetize a DeFi app?

The easiest way to monetize a DeFi app is to set up a payment channel and then charge the user. You can also set up a subscription model and charge the user every month, or you can use a micropayment system and charge them very small amounts of money. You can charge users for using your application, or you can receive some kind of commission from the network.

How DeFi differs from DApps?

The main difference between DeFi and DApps is that DeFi is an acronym for “decentralized finance,” while DApps stands for “decentralized applications.” In practice, this means that DeFi refers to the idea of using blockchain technology to create decentralized digital assets and financial tools, while DApps refers to software that runs on a decentralized network. DeFi and DApps are both decentralized applications, but DeFi works with different financial instruments, such as loans and derivatives.

Conclusion: How to Make a DeFi App and Succeed

  • A good tech stack (with Solidity, Web3 APIs, blockchain protocols, developer tooling, etc.) will help you build a product that is scalable, secure, and easy to maintain. It will also give you more options for future development because you won’t be locked into using one language or framework for all of your projects.
  • Build for scalability. It’s important to think about scalability from the very beginning so that your application can handle large volumes of users. Make sure to use a proven scaling solution like GrapheneDB or MongoDB.
  • The discovery phase includes the research phase, which consists of studying all existing DeFi applications available on the market. The goal of this research is to get ideas for new features and improvements for your own DeFi application.
  • The solution to challenges is to find the right DeFi application development team such as ProCoders that can help you create an amazing product. They will help you develop DeFi app from scratch, or even improve an existing one.
Let's schedule a call to discuss all your needs!

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