- How To Build A Finance Platform On Ethereum?
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Interested in building a finance platform on Ethereum?
That’s an excellent market with many opportunities to be explored. So, let’s start our guide on building a finance platform on the ethereum network.
Choosing the right blockchain network for your financial platform
Blockchain has advantages for the financial services industry when compared to traditional finance practices, however, you need to choose the right blockchain network. Ethereum, a reputed smart contract platform is certainly a great choice, however, its public blockchain network isn‘t suitable here due to the following reasons:
- Anyone can join this network, however, the financial services industry can allow only trusted parties to join their blockchain network.
- Transactions on the Ethereum public blockchain network are transparent, consequently, this network can‘t meet the data privacy requirements of a financial platform.
- Ethereum public blockchain network uses the “Proof of Work” (POW) consensus algorithm. This limits the scalability, and transaction throughput is low. Read “Proof of work vs proof of stake comparison” to learn more about POW.
I recommend that you use Quorum, an Ethereum-based blockchain protocol. Read on, as I explain its benefits.
A brief introduction to Quorum
J.P. Morgan has developed Quorum, and they have forked it from Ethereum in a way that it can easily incorporate future updates to Ethereum. Key features of Quorum are as follows:
- Quorum is a framework for a permissioned blockchain network, therefore, it will allow only trusted parties.
- It provides a layer on top of Ethereum, which facilitates private transactions.
- Quorum uses “Constellation”, which is a P2P encrypted message exchange that helps conduct private transactions.
- This framework uses consensus algorithms like Raft, which expedites transaction validation.
- Another consensus algorithm in Quorum is “Istanbul BFT”, which is a “Practical Byzantine Fault Tolerance” (pBFT) algorithm, and delivers faster performance.
Read about the features of Quorum in “Quorum 101: Getting started with Quorum”.
Finding the right blockchain network host
Now that you have found the right Ethereum blockchain framework to use, the next step is to find the right blockchain network host. You can‘t use a readily available public blockchain network like Ethereum if you are building a permissioned blockchain network for enterprise use.
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You need to carefully analyze available “Blockchain-as-a-Service” (BaaS) options, e.g.:
- Blockchain on AWS;
- SAP cloud platform BaaS;
- Microsoft Blockchain on Azure;
- IBM Blockchain Platform.
You can read about these options in “Best blockchain network hosts”. I recommend that you use Microsoft Blockchain on Azure in this project since it supports Quorum.
How to create a finance platform using Quorum
I will now take you through the steps to create a finance platform using Quorum, and these are as follows:
1. Study a similar decentralized finance platform project
You might have specific features in mind for the planned finance platform, and I recommend that you study a blockchain project that addresses similar use cases. You can read “The future of blockchain: fintech 50” for a good list of fintech blockchain projects.
For e.g., if you are planning to build a blockchain-powered financial transactions settlement platform, then Ripple is a good example to study. It‘s a blockchain-based network for global market settlements. SWIFT, the interbank messaging platform is the leader in this use case in the traditional financial institution world.
Smart contracts are open-source, therefore, you can study this project and get useful ideas. You can find the Ripple smart contracts in its GitHub repository.
2. Build a development team
Your development team needs the following roles:
- Business analysts;
- UI designers;
- Blockchain developers with Quorum, Ethereum, and Solidity skills;
- A project manager (PM).
Blockchain development skills like Ethereum and Solidity are niche, moreover, Quorum is new. Your team might need training and guides, therefore, check out the following:
- The Udemy course “Ethereum: Decentralized Apps Design & Development”;
- “Ethereum and Solidity: The Complete Developer’s Guide” on Udemy;
- Quorum documentation on GitHub.
3. Get a Microsoft Azure BaaS account
To use Quorum on Microsoft Azure BaaS, you first need to get an account there. Do the following:
- Visit the Azure Blockchain Service website.
- Check out the following documentation:
- “Quickstart: Create an Azure Blockchain Service using the Azure portal”;
- “Getting started with Azure Blockchain Service Part I: Deploy and configure your network”;
- This guide for writing and testing smart contracts;
- “Getting started with Azure Confidential ledger”;
- The documentation for using DevOps on Azure BaaS is available on the same portal.
- Review the pricing plan for Azure BaaS.
- Sign-up for an Azure BaaS account.
- Get the Azure blockchain development kit.
4. Buy Quorum on Azure Marketplace
The next step is to buy Quorum for using it on the Azure BaaS. You need to take the following steps:
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- Visit Azure Marketplace to buy Quorum;
- Check out the pricing plans for Quorum;
- Read the GitHub documentation for Quorum;
- View this guide for using Quorum on Azure BaaS.
5. Set up your blockchain network using Azure Blockchain Workbench
You now need to set up a Quorum blockchain network on Azure BaaS, and you can use Azure Blockchain Workbench for this. The benefits of using this workbench are as follows:
- It offers important tools, therefore, you can configure and deploy a blockchain network quickly.
- The ledger deployment is automatic, moreover, you can use the blockchain commands in Azure Blockchain Workbench to construct the network easily.
The following learning resources will help you to get going quickly:
- The overall Azure Blockchain Workbench documentation;
- This guide to deploying the workbench;
- “Tutorial: Create a blockchain application in Azure Blockchain Workbench”.
6. Code Quorum smart contracts on Azure BaaS
Developing Quorum smart contracts is quite like coding Ethereum smart contracts since Quorum is built on Ethereum. This involves the following steps:
- You need to code smart contracts using Solidity, i.e., the proprietary language of Ethereum.
- One can‘t modify smart contracts after deploying them, moreover, their execution is irreversible. You need to develop bug-free smart contracts, therefore, keep the logic simple. This makes debugging easier.
Note the following:
- Azure BaaS uses MetaMask, the popular browser extension that Ethereum developers use.
- You can code your smart contracts using Remix, a well-known IDE for Solidity smart contract development.
- Azure BaaS also uses Truffle, which is a very useful framework for smart contract testing and deployment.
You can read “Azure blockchain service development overview” to understand how Azure uses the above tools and frameworks with Quorum. This guide also explains how you can create Quorum private transactions, which are important for a financial platform.
7. Test and deploy Quorum smart contracts on Azure BaaS
The good news about Azure BaaS is that you can avail of its robust DevOps capabilities for testing and deployment of your smart contracts. This helps you with several tasks, e.g.:
- Unit testing and debugging of smart contracts;
- Test environment management;
- Deploying smart contracts.
You can read “DevOps for blockchain apps” to get guidance for the above, moreover, “DevOps for blockchain smart contracts – implementation guide” is another important guide for you.
Best software development teams test their code and undertake formal verification steps. However, it‘s hard to implement a verification mechanism for blockchain smart contracts since the required skills are hard to come by!
Blockchain smart contract audit and verification is a costly, time-consuming, and labor-intensive job. You can read more about this in “Blockchain smart contracts: More trouble than they are worth?”.
Microsoft Research offers an excellent solution to this challenge, and it‘s called “VeriSol”, which stands for “Verifier for Solidity”. Developers can use VeriSol to specify what behavior they expect from their smart contracts, and the tool then mathematically verifies if the code meets the specified conditions.
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You can read more about VeriSol in its GitHub repository. Azure BaaS DevOps infrastructure has fully integrated VeriSol, therefore, you can now have formal verification of your Quorum smart contracts.
Congratulations! You have just completed your project to build a finance platform on Ethereum.
Have a great idea for a finance platform on Ethereum?
BaaS platforms, tools, and frameworks can certainly help, however, a project to create a finance platform on Ethereum involves several niche skills. This makes it a highly complex project, and you should consider working with a reputed software development company on this project.
Our guide “How to find the best software development company?” can help you to choose a capable development partner.
If you are still looking for competent blockchain developers to build your blockchain finance platform, then why not contact DevTeamSpace via this quick form and partner with the software developers community that is an expert in all the latest technologies including blockchain?
Frequently Asked Questions on Finance Platform On Ethereum
A financial platform is a software platform that allows users such as financial institutions and financial advisers to access financial services such as stocks in order that can manage their portfolios.
Blockchain technology offers a unique set of benefits for any database-based solution with an internet connection which includes financial platforms. Decentralized applications include immutability and better database security. Decentralized exchanges that enable users to form liquidity pools rather than a centralized exchange and flash loans involving crypto-assets and DeFi protocols are financial blockchain applications.
Charles Schwab is an excellent platform for trading services using digital assets and initial coin offerings. Other good examples of decentralized infrastructure for investing include Fidelity Investments and Interactive Brokers.