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In this article, we will discuss how to build a DeFi app in detail.
From the mid of 2018, the popularity of DeFi services in financial products is continuously growing among tech enthusiasts and today the total value locked of DeFi is more than $77 billion. Read our blog here to gain more insight into what is DeFi.
Guide to Build a DeFi App
Here, we will enlist the steps required to build a DeFi app successfully in the competitive crypto space.
Plan your DeFi App Type
The first step is to decide the type of DeFi application you want for your user market. Decentralized finance is a huge sector. DeFi apps are contributing towards it in various ways from assisting in borrowing and lending crypto assets, mining cryptocurrency, getting insurance, etc.
Conduct comprehensive market research to get an idea of what your competitors are building, what features are popular among DeFi users, and what features align with your DeFi business idea.
Read our blog here to know more about the characteristics and types of DeFi applications.
Build a Blockchain App Development Team
Blockchain is a growing technology. Despite its popularity, there is a steep learning curve. You will require a software development team with distinguished roles as enlisted below:
- A business analyst;
- UX/UI designer;
- Mobile or web app developers with blockchain development experience;
- App testers/ quality assurance engineers;
- A project manager.
Decide your DeFi App Blockchain Infrastructure and other Requirements
Now is the time to decide your mobile or web app infrastructure and other app development requirements specific to the blockchain.
Mobile or web infrastructure includes backend servers, data storage, networking, security services, etc. These days businesses prefer to invest in a cloud infrastructure developed and maintained by cloud computing service providers.
They help businesses to start developing and testing software applications instantly on a small scale using the latest tools and technologies and scale their applications when required.
For blockchain-specific requirements, you will have to decide on the blockchain network your application will run on. Ethereum is a popular blockchain network for DeFi and DApp in general for quite some time now.
However, more people joining a blockchain network also means network congestion, which results in slower transactions and more costs.
For this reason, you may want to explore other blockchain networks. You will have to make sure that they support features that you plan to incorporate into your DeFi app.
Some other parameters to check the suitability of a blockchain network are the number of users as in its popularity among the blockchain community, network fees, associated peer-to-peer transaction speed, technology behind the blockchain network, and its compatibility with the development technologies you are planning to go for.
Does it requires entirely new programming skillset or works well with mainstream languages like solidity and Go?
Select an App Development Methodology
Before starting with DeFi app development, choose an app development methodology that your whole blockchain project team will follow. Software development methodologies and their associated frameworks keep all team members on one page, assist project managers in setting realistic deadlines, etc.
The software development industry largely uses agile development methodology especially for mobile and web app development projects, given their nature of them these days. Apps today are largely dependent on real-time user data, and follow a user-first design approach.
User preferences are volatile when it comes to technology products. Businesses have to stay up-to-date with app features and users’ requirements. Software developers ensure this through frequent code modifications and feature updates.
Agile app development methodology suits this scenario. It breaks down a software development project into multiple iterations. Each iteration involves the development, testing, and deployment of specific features.
Features are released in the user market and user feedback is collected. Modifications are made accordingly. This strategy enables CTOs to satisfy their product customers right from the beginning and reduce market failure risks to a great extent.
Design a User-Friendly App Interface
Many of your DeFi app users will be new to the concept of decentralized finance, and blockchain technology in general. There are new terminologies to understand, and rules to follow. You do not want to add a daunting app interface on top of it.
Engage with experienced UX/UI developers to develop a user-friendly app interface that is easy to use and visually appealing. An intuitive app interface is a great source to build your business identity and retain app users.
Build DeFi App
Now, you can start with backend coding and blockchain development. Partner with expert software developers who have experience in blockchain development. With the DeFi mobile or web app, you have to meet some specific blockchain requirements.
Solidity is considered the top choice of blockchain developers to develop and deploy smart contracts. It is an object-oriented programming language. Its syntax is similar to C++ and Python and offers programming concepts like functions, variables, loops, etc., like other modern programming languages.
As Solidity was created solely for smart contract programming, it is widely adopted by blockchain developers and has a huge developer community support.
Your DeFi app developers should also be familiar with different blockchain network implementations. There are tools available to efficiently perform blockchain and smart contract deployment.
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For example, Ganache can be used to develop an ethereum blockchain that emulates a real blockchain network. It can be used to test smart contracts. Truffle is a development environment for developing smart contracts for the ethereum network. It is available as a command-line tool and desktop application.
This blog here describes a DeFi app development using a farm token smart contract. It discusses important concepts like solidity smart contracts migrations, install truffle, truffle console, truffle configuration file, transfer farm tokens, deployment scripts, etc.
Tokenomics is another important concept in DeFi technology that your app developers should know about. Defi tokens form an integral part of DeFi apps.
For features like staking, decentralized exchanges, and liquidity pooling, you will have to introduce crypto tokens and also the mechanism to use them through your app. Your app developers can use tools like OpenZeppelin to make use of standard token implementations such as ERC721 and ERC20 token
Moreover, you will also decide if you want to go for a web app or a mobile app. Most businesses today are opting for a mobile-first development approach. Decide if you want to reach the Android user market or the Apple market.
For each of these, your developers will engage in native app development with tools and technologies specific to both.
A hybrid app is another option that you can opt for. These apps can run on all mobile operating systems and allow businesses to reach a greater audience.
Of course, the cost is slightly low performance as compared to native apps that are built just for specific mobile hardware and OS.
Complete the Required Integrations for DeFi App
You will need to work with APIs to integrate third-party functionalities into your mobile or web app. Some common ones are user authentication, app notification support, etc.
For a DeFi app, you may require some additional integrations such as data feeds to access off-chain data, a defi wallet app feature, etc.
You can also develop your own crypto wallet through tools like Everchain and provide private keys to users, but integrating developed crypto wallets supporting multiple tokens from different blockchain networks ensures more user data safety and faster time to market.
Ensure DeFi App Security
DeFi protocols are reported to have lost $2.3 billion due to breaches in crypto-security in 2021. As more people are engaging in the decentralized marketplace for trading, staking, mining, etc., crypto crimes are also rising.
You will need to make DeFi app security your priority. Include security-first app development procedures. Engage security professionals right from the beginning. Make vulnerability testing procedures a priority.
Test your DeFi App
After DeFi app development, ensure the quality of your mobile or web application. Your development team should make sure that the app meets all the functional requirements.
Your app testers will now perform testing methods such as unit testing, integration testing, performance testing, etc., to ensure that each feature is working as planned. Security testing is also performed to check if there is any vulnerability in the app code.
There are numerous tools available to automate the testing process. For example, selenium can be used for testing web apps, Espresso tool is used for testing Android apps, XCTest by Apple is used to test iOS apps, and Appium is a testing tool for both, native and hybrid apps.
Release your App in the User Market
Once you are sure that your DeFi app is developed and tested as per your business requirements, it is time to release it in the blockchain market. At this point, you will need to monitor how your DeFi app is performing in the blockchain community.
For this purpose, you can integrate user feedback forms in your defi app, ask app users to leave their feedback, rate the app in app stores, etc.
Implement a Post-Release Improvement and Maintenance Plan
You will use all this user feedback data, collected in the previous step, to improve your DeFi app features in the next app development iteration. You can use tools like Qualtrics to perform analytics on this feedback data and get useful insights.
Every app needs maintenance. Electronic devices, especially mobile devices, update frequently. Your app development team will need to keep up with the latest mobile OS versions so that your DeFi app works smoothly on every device.
You will need to make a post-launch maintenance plan that will include security patches, feature updates, UI enhancements, etc. Discuss this plan with your app development team priorly.
Looking Forward to Building a DeFi App?
The decentralized finance market is growing, and there is a lot of potential in DeFi app development. If you are planning to invest in a decentralized finance application, it is a good call.
However, make sure to not give in to the blockchain buzz and perform proper market research before starting with the app development for a successful DeFi project.
At this point, it is very much likely that you have the next market-competitive DeFi app idea in your mind, and you are looking for the right blockchain development team.
DevTeam.Space can help you here. Take a look at the profile of our experienced blockchain developers here who have built several next-level blockchain applications. A few examples include ALGO TRADING SOLUTION, DDKOIN, and CRYPTOCURRENCY EXCHANGE.
Write to us your DeFi app development requirements via this quick form here. One of our technical managers will get back to you for further discussion on the required developers, project execution, etc.
Top FAQs on How to Build a DeFi App
DeFi apps allow users to access decentralized finance platforms through mobile or web apps and just an internet connection. Smart contracts define the working of DeFi apps and run on blockchain networks. DeFi applications work on digital assets like DeFi coins or cryptocurrencies that are used for borrowing, lending, saving, trading, liquidity pooling, etc.
To build a DeFi app, start by deciding on the features of your DeFi app. Next, decide on app infrastructure, the blockchain network it will run on, a business logic to store in smart contracts, partner with professionals to develop smart contracts, app features, etc.
DeFi is decentralized finance. It is revolutionizing traditional finance services using blockchain technology without any need for centralized financial institutions. This means DeFi supports more transparent, secure, and unalterable financial services such as digital asset transactions, mining, trading, insurance payments, etc.