Though the decentralized finance (DeFi) sector is still not established enough, it grows exponentially and also grows the interest to the technology. It is the time when early adopters can bring innovation and rise great capital. And without any banking or government regulations needed (comparing to traditional fintech software development), such initiatives can be launched even by one person.
Here we collected best practices that are actively forming in the decentralized finance industry. If you are planning a business or investment in the DeFi area, you probably should know these things.
- As a new financial system, DeFi is a collective term for all the products in the industry;
- DeFi products let you exchange, borrow/lend, save, invest, trade, and more;
- Built on a Blockchain network;
- DeFi uses cryptocurrencies and smart contracts to provide services that don’t need intermediaries;
- Defi applications provide all financial services in a decentralized, borderless manner that allows everyone with just an internet connection to access and use them to their benefit.
1. User experience for not tech-savvy
When people understand, they trust. You will gain a great competitive advantage by making your DeFi app accessible not only for tech guys who can check deal conditions in a smart contract code.
Here are some companies that already make some steps to more mainstream adoption:
- crypto exchange BitMax.io adopted human-readable e-wallet addresses (like [email protected]). As simple, as your e-mail address.
- HARD Protocol provides an intuitive user interface along with cross-chain capabilities, supporting multiple assets, including BTC, XRP, BNB.
2. Keep your smart contracts’ logic simple
Smart contracts usually have plenty of features to develop. However, complex contracts lead to difficult or sometimes impossible deployment or updates in the future. Also, when you have a transparent logic and simple architecture of your protocol contract, you do not have to worry about integration and project improvement difficulties
One more reason is that simple smart contracts will be easier to understand for users who know programming languages.
3. Safety and security in the first place
We all know how bitcoin-related things are often associated now with hackers and scammers. It is your first and foremost goal — to gain customers’ trust. And the trust should be based first of all on fintech software safety and security.
Every DeFi hack in the past two years is a result of bugs in the code. Bug bounties and 3rd parties audits which are often ignored by DeFi entrepreneurs can greatly contribute to users’ safety.
4. Integration with other DeFi apps
Firstly, you provide more comfort to your customers who might already use some of the DeFi instruments or are planning to use them. Secondly, you get more flexibility since you will be able to create new DeFi strategies and switch between them. All this results in more profit.
You should think about integration from the very beginning of custom app development to build your product accordingly. So, identify other DeFi apps your users might need early in the process. Usually, initial integration should start from cooperating with market giants like Curve.fi, Compound, Balancer, or Aave.
5. Consider other ecosystems besides Ethereum
Ethereum is the most popular ecosystem for DeFi apps. However many experts are already talking about the scalability and security problems of the platform and sky-high transaction fees only affordable for highly capitalized users. For these reasons and many others, leading platforms like Binance, Cosmos, and Kava have chosen to leave Ethereum.
Turn your experiment into a growing business
If you join the industry you should accept that the sector is a high-risk and high-reward game. You need deep technical knowledge with a clear understanding of finance and business.
If you are excited about the idea of contributing to the independent financial ecosystem, Digis is a good place for custom financial software development. We have all the necessary resources. Besides a team of the best DeFi app developers, we provide you with strategic support and help with fundraising (if needed). You can get a cost-breakdown for your app, using our free calculator.