Regenerative Finance: Technology Overview And Future Application

From CeFi to DeFi and reinvented ReFi, Web3 has reshaped traditional finance-related activities such as capital investment, profit distribution, and fund transfer. In the field of blockchain, regenerative finance (ReFi) is gradually getting attention on behalf of the blockchain application in the carbon trading market, opening a whole new chapter.

ReFi is not something new, as we at IdeaSoft have already worked with it. We predict a new boom for ReFi projects in 2024. This article will discuss what is ReFi, why ReFi aims for sustainability, and what is the future of regenerative finance.

Does your company actively seeks to contribute positively to the environment and communities while conducting its financial operations?

ReFi promotes the practice of low-carbon actions through blockchain technology and financial reward mechanisms. Through the transparent and resistant characteristics of the blockchain, it regularly rewards those who contribute to green development. Build your own finanial app based on ReFi concept! Contact us and we will help you with the correct requirements for your solution.

Table of Contents:

Introduction to ReFi: What Is Regenerative Finance?
Conceptual Framework of Regenerative Finance (ReFi)
Technological Underpinnings of Regenerative Finance (ReFi)
How is ReFi Different From DeFi?
ReFi Case Study: Toucan Protocol
Future Applications of Regenerative Finance (ReFi)
Summary

Introduction to ReFi: What Is Regenerative Finance?

Regenerative Finance (ReFi) is a movement based on blockchain technology to encourage people to practice low-carbon and curb or reverse climate change through innovation in financial incentives. Currently, startups, non-profit organizations, investors, venture capital firms, and others have already developed some key infrastructure and applications in Web3. They inject new vitality into sustainable development while actively promoting the construction of a healthier and fairer environmental Web3.

Based on top blockchain development platforms, ReFi combines economic incentives with the current hot topic of sustainable development to bring all industries together to achieve this goal. Blockchain’s distributed network and incentives give it a natural advantage in creating mechanisms, such as smart contracts and NFTs, that can drive the economy toward sustainable development.

Conceptual Framework of Regenerative Finance (ReFi)

This conceptual framework helps to create a more sustainable and just social future in Web3:

Climate stabilization. ReFi helps stabilize the climate by supporting clean energy and low-carbon lifestyles. It reduces carbon emissions and climate disasters such as forest fires by creating carbon markets to track and allocate resources. This helps reduce the management cost for countries and reduces the impact of climate extremes.
Establishing social justice. ReFi aims to achieve sustainable development, maintain a balance between people and the environment, and bring about positive cycles. This can be achieved by planting trees to improve the environment, contributing to remote areas, making financial services accessible to lagging countries, etc.
Increasing financial inclusion. ReFi provides greater financial opportunities and choices to groups that currently do not have access to traditional financial services. This increases financial inclusion, enabling more people to access the financial support necessary to grow their businesses and families.
Reducing financial risk. ReFi creates more transparent and stable financial markets by utilizing new technologies such as blockchain. This helps to reduce financial risk and make the financial system more robust, thereby protecting investors and financial institutions from unnecessary losses.

So, regenerative finance principles bring much value and impact to society, including stabilizing the climate, establishing social justice, increasing financial inclusion, and reducing financial risk.

Technological Underpinnings of Regenerative Finance (ReFi)

Taking control of the carbon footprint is an important part of sustainability. For ReFi companies, it is not enough to achieve carbon neutrality. They aim to positively impact the climate, i.e., energy savings, emission reductions, and negative carbon emissions by removing greenhouse gases.

In Web3, energy savings and emission reductions can be achieved by choosing energy-efficient alternatives or increasing the percentage of clean energy applications. For example, Ethereum switched from a PoW mechanism to a PoS mechanism, thereby reducing energy consumption by 99.95%.

On the other hand, blockchain can track environmental impacts, improve carbon footprint transparency, and enforce accountability for carbon emissions. “Blockchain+Financial Resources” is not only a technological tool but also a resource to help regenerate the planet.

The innovation of regenerative finance is that financial institutions benefit from renewable energy projects not only on a physical and financial level but also on a social level. Thus, ReFi encompasses multiple dimensions, such as the assetization of renewable energy, the development of accounting measurement standards, and the digitization of carbon assets.

Here are some examples of how blockchain is empowering ReFi to create a sustainable future:

Gamification. ReFi promotes rewarding participants with work credits, tokens, points, and so on for taking real action to eliminate CO2 emissions.
Accountability. Blockchain can be used to credibly trace carbon emissions and hold governments, businesses, and NGOs accountable for climate goals.
Asset digitization. It is possible to use digital twins to transform carbon assets into credible and traceable digital assets, increasing asset liquidity.
DAO & Community. ReFi leverages the DAO or Web3 community to promote sustainable policy implementation and green business.

In addition to the above applications, blockchain can enable some things traditional tools cannot do. For example, the contribution of traditional joint ventures is measured chiefly only by the percentage of equity investment, which does not reflect the true picture of the operation of the partnership.

The contribution of a joint venture should include the business opportunities that each partner has brought to the joint venture once the business has started operating, as well as the value that has been driven in the alliance.

In a ReFi crypto eco-alliance built on blockchain, with a good incentive design and governance structure, it is possible to measure the contribution of these more meaningful metrics to create a more productive form of cooperation or alliance model.

Regenerative finance functions more as a framework for engaging in social activities. From my perspective, this is unlikely to reshape the market but presents an opportunity for enthusiasts to leverage this functionality. While it introduces a novel approach to incentivizing social participation, its transformative impact on the broader financial landscape remains to be determined. The concept’s significance may lie in affording enthusiasts a platform to harness its functionalities rather than fundamentally altering market dynamics.
Herman Stohniiev, CTO at IdeaSoft

How is ReFi Different From DeFi?

DeFi platform development is often confused with ReFi platform development. Here is a brief comparison of ReFi vs DeFi.

ReFi vs DeFi, Regenerative finance in crypto

As the threat of climate change intensifies year by year, it is even more vital for enterprises to shoulder their social responsibility. More and more financial institutions are facing pressure not only in terms of investment but also in terms of the social and environmental impact of their investment policies.

An alliance that brings together the resources of communities, investors, and financial institutions can not only make more all-encompassing investments worldwide but also form a large infrastructure portfolio that enables comprehensive investments and quick processing methods.

ReFi Case Study: Toucan Protocol

The example of the Toucan Protocol provides a better understanding of how carbon rights are tokenized and solves the price discovery problem. However, the Toucan Protocol still has issues that need to be addressed.

For example, whether carbon credits are actually beneficial to the climate and whether on-chain trading meets real-world international market standards. Both the on-chain and off-chain worlds have their issues to face.

The Toucan Protocol, which converts Verified Carbon Units (VCUs) into a cryptocurrency and a regenerative economy based on the DeFi model, consists of 3 main elements.

Element 1: Toucan Carbon Bridge

The Toucan Carbon Bridge enables users to store carbon credits as NFTs on the blockchain. Advantages include complete transparency and divisibility, and the destruction of carbon tokens on the chain is equivalent to the cancellation of carbon credits, which prevents double-counting. The NFT can be split into fungible toucan carbon tokens to facilitate transactions.

Element 2: Toucan Carbon Token (TCO2)

Since Toucan Carbon Token still retains the original properties of NFT (origin registration, yearly score, etc.), it causes the problem of illiquidity. It is also a major pain point in the real-world carbon rights market, hence the emergence of Toucan Carbon Pool.

Element 3: Toucan Carbon Pool

It is needed for product differentiation per project. The Toucan Carbon Pool solves the problem of price liquidity in the carbon market by taking carbon tokens (TCO2 tokens) from multiple projects and pooling them into a more liquid carbon index token. It can be traded on a decentralized exchange.

Need more tech details?

Contact our team to get more information about the ReFi concept and how it can help your project to contribute.

Future Applications of Regenerative Finance (ReFi)

ReFi could encourage the development of innovative financing models, such as green bonds and impact investing, specifically tailored for sustainable infrastructure. These financial instruments can attract capital from investors seeking both financial returns and positive environmental impact.

By aligning financial incentives with sustainability goals, ReFi has the potential to accelerate the transition to a more sustainable and resilient Web3 infrastructure globally. Leveraging outstaffing for Web3 development can empower organizations to build cutting-edge ReFi solutions by accessing skilled developers specialized in blockchain and sustainability-focused projects.

Regenerative finance in crypto can empower local communities through decentralized financial solutions. This involves shifting financial decision-making and resources closer to the communities that are directly affected by them. Local community banks, credit unions, and microfinance institutions adhering to regenerative finance principles may emerge as key players in providing financial services to underserved populations.

Regenerative finance can also be crucial in funding conservation and restoration efforts and supporting initiatives to protect biodiversity and ecosystem services. Financial institutions incorporating regenerative principles may allocate resources to projects focused on reforestation, habitat preservation, and sustainable land use practices.

So, regenerative finance seamlessly fuses the principles of regenerative economics with the innovation of decentralized finance. This visionary financial ecosystem represents a paradigm shift, aspiring to make financial services and products accessible to all.

The ReFi-driven movement has initiated robust communication channels within its community, and the momentum is surging, propelled by the transformative capabilities of Web3 technology.

Notably, the focus is steadfastly placed on catalyzing sustainable development across diverse sectors through ReFi projects embedded in the Web3 landscape. Brace yourself for the impending takeoff of these groundbreaking initiatives in 2024 as they redefine the future of finance.

Summary

As ReFi heats up in 2023, there is an influx of ReFi projects that aim to engage companies and users in solving many of the world’s problems while using cryptocurrency to label their contributions and economic returns.

At IdeaSoft, we believe that 2024 will be the year that ReFi gains more mainstream attention and adoption, proving that cryptocurrencies can directly impact the real world. ReFi will help shift the crypto narrative from the “scam” to one promoting a more sustainable, low-carbon economy.

Decentralized Physical Infrastructure (DePIN) Explained

A new era in crypto and DeFi is rapidly evolving. When the growing influence of blockchain technology is combined with the rapid development of globalized information technology, a whole new playing field is unveiled. This is DePIN (Decentralized Physical Infrastructure Network). The concept of DePin is now a hot topic among crypto enthusiasts, promising a revolution in decentralized physical infrastructure.

At IdeaSoft, we noticed this trend at the Breakpoint conference by Solana Foundation. There were active conversations about using this technology and how to create a blockchain application to succeed in 2024. We expect a wider adoption of the DePIN concept in the coming years, and that is why we aim to shed light on DePIN applications and the benefits of DePIN.

Table of Contents:

Conceptual Understanding of DePIN
Physical Resource Networks vs. Digital Resource Networks
How DePINs Transform Web3?
Examples of DePIN Projects
Future DePIN Applications
Summary

How can DePIN benefit your startup?

The main benefits of using DePIN in startups are rapid scale, neutrality with credibility, collective ownership, and frictionless payments.

Want to build a scalable technology based on the emerging DePIN concept? Our experienced team can help you with it and draw up the correct requirements for your product. Contact us to schedule a free consultation!

Conceptual Understanding of DePIN

DePINs, or Decentralized Physical Infrastructure Networks, are networks that use token incentives to motivate individuals to share their resources. This sharing of resources covers a wide range of areas, including storage, communications traffic, cloud computing, energy, etc. DePINs have transformed infrastructure provision by centralized enterprises into a form of crowdsourcing that involves users worldwide.

Why do we need DePIN? The answer to this question relates to the limitations of the current ICT (Information and Communications Technology) infrastructure. DePIN provides decentralized infrastructure and the possibility to address different limitations.

The term DePIN was first promoted and emphasized in the report of the investment research institute Messari, which also set up DePIN-related statistics.

Ethereum is known as the main chain for DePIN projects, but Solana is also starting to take the position here. The market is currently dominated by leaders such as Filecoin, Render Network, Theta Network, Arweave, and Akash Network. Developers often explore Ethereum and Binance for DEX to leverage their advanced functionalities and ecosystem support for DePIN initiatives.

How does DePIN work?

Let’s explore how DePIN works. DePIN uses a token economy model to incentivize users to provide resources, including GPU power, hotspots, storage space, etc. In the early days of DePIN, tokens often had no real value, so users engaged in a behavior similar to that of venture capitalists. They invested in bullish DePIN projects, becoming “risk miners” and reaping the benefits of increased token acquisition and token price appreciation.

what is DePIN — *The DePIN concept work model*

Modern DePIN projects have the following goals:

Attracting supply-side participants through tokens. Adopting a well-established token economy model attracts early participants to contribute to the network construction and provide resources. They are rewarded with tokens in return.
Attract consumers. As resource providers grow, some developers join the ecosystem to create products. Consumers are also attracted to DePIN once the provider can offer certain services at a lower price compared to centralized infrastructures.
Positive feedback. As the number of users increases, this demand motivates supply-side participants with higher revenues, creating a positive feedback loop. It attracts more participation from both supply and demand.

Early projects in the DePIN space focused on storage and communication technologies, such as decentralized network Helium (2013), decentralized storage Storj (2014), and Sia (2015). With the development of the Internet, Internet of Things (IoT), and Artificial Intelligence (AI), the focus of DePIN innovations has expanded to include computing, storage, communication technologies, and data collection and sharing.

Physical Resource Networks vs. Digital Resource Networks

What is a decentralized network? We have prepared a comparison table to help you understand the difference between physical resource networks vs. digital resource networks.

	Physical Resource Networks	Digital Resource Networks
Accessibility	Limited by geographical constraints; physical presence is often required for maintenance and operation.	Accessible globally, allowing remote management and utilization of resources.
Scalability	Expanding physical networks often involves significant time and cost investment in acquiring new assets and infrastructure.	Easily scalable by adding or adjusting virtual resources, offering greater flexibility and cost-effectiveness.
Maintenance	Regular maintenance and repair are necessary for physical components, with potential downtime during maintenance activities.	Maintenance involves software updates and digital security measures, with minimal impact on ongoing operations.
Resource Duplication	Physical assets must be replicated for redundancy, leading to higher costs and resource consumption.	Digital resources can be duplicated or backed up more efficiently, reducing costs and improving resilience.
Cost	Initial setup costs are typically higher due to the purchase of physical assets and infrastructure.	Initial setup costs are generally lower, but ongoing operational costs may include software licenses and cloud services.
Flexibility	Limited flexibility in reconfiguring physical networks, often requiring significant time and investment.	Highly flexible, allowing quick adjustments to resource allocation, configuration, and adaptation to changing requirements.
Security	Physical security measures are crucial to protect assets, and breaches can have significant consequences.	Digital security measures, such as encryption and cybersecurity protocols, are essential to safeguard data and systems.
Lifespan	Physical assets have a finite lifespan and may become obsolete over time, requiring regular upgrades.	Digital resources can have a longer lifespan, with the potential for updates and upgrades to extend functionality.

The comparison table provides a general overview, and specific cases may vary based on the industry, context, and technology advancements. If you want to develop your own innovative Web3 application, we have many articles in our blog on how to create a Web 3.0 app, or you can contact us, and we will consult you regarding your ideas.

How DePINs Transform Web3

DePIN Web3 emerges as a solution to address critical challenges within the Web3 ecosystem, particularly the bottleneck associated with centralized infrastructure. This decentralized model can reduce the strain on any single point of failure, fostering a more robust and adaptable infrastructure for decentralized applications (dApps).

DePINs play a pivotal role in facilitating the creation of applications that require physical infrastructure support. These applications often demand significant computing power, storage, and bandwidth. DePINs provide a decentralized network of resources that developers can tap into, offering improved resource availability.

Furthermore, the global accessibility of Web3 stands to benefit from DePINs. In regions with limited access to traditional centralized infrastructure, these decentralized systems allow the widespread adoption of innovative technologies. DePINs contribute to a more globally accessible Web3, empowering users worldwide to engage with and leverage decentralized technologies.

Examples of DePIN Projects

Here are 4 prime examples of DePIN crypto projects.

Filecoin & Arweave – The Leaders in Decentralized Storage

Filecoin and Arweave are redefining how data is stored. Filecoin drives distributed storage through token incentives based on the IPFS protocol, and Arweave provides a permanent storage solution. These innovations reduce the cost of storage and improve data security and reliability.

Helium – Leading the Way in Decentralized Wireless Networking

Helium is a pioneer in decentralized wireless networks, engaging users to build the Internet of Things (IoT) through token incentives. With significant progress in the IoT space and challenges in the 5G and WiFi markets, Helium’s success lies in its effective use of decentralized technology to solve the problem of high IoT infrastructure costs.

Render Network – The Rising Star of Decentralized Computing

The Render Network, a decentralized GPU rendering platform, provides a new image and animation rendering solution. The network effectively matches GPU supply and demand through a multi-tiered pricing strategy while facilitating the reuse of idle GPU resources, providing customers with a more affordable rendering option.

Theta Network – The Innovator of Decentralized Streaming Media

Theta Network leverages decentralized technology to optimize content delivery, lowering the cost and increasing the efficiency of image delivery. Theta Network features users contributing bandwidth and computing power as part of the video delivery, providing users with a better video viewing experience.

Future DePIN Applications

The development of the DePIN domain has revealed many advantages, such as increasing resource efficiency, reducing costs, and increasing market transparency. At the same time, it also faces technical, market, and regulatory challenges. These challenges include improving the user experience, maintaining competitive advantage, and complying with regulatory compliance.

The future of the DePIN space is full of opportunities and challenges. With technological advances and increased market awareness, these innovations are expected to address current challenges and revolutionize data storage, computing, and image delivery. Looking ahead, DePIN has the potential to become a key infrastructure to support the digital economy, bringing real value to society, businesses, and individuals.

DePIN use cases are diverse, from WiFi to data storage and transportation. A great example is the global map of the Helium (IoT) network, which is updated every 30 minutes. It shows extensive use.

With DePIN, people can use WiFi, transportation services, storage, IoT infrastructure, data, maps, and so on while earning rewards. This is not just about trend growth but also about driving mass crypto adoption. This trend promises a major transformation in how we interact with technology and infrastructure daily.

DePIN is an exciting model for incentivizing the real sector through blockchain technology. The network supports physical infrastructure development through a profit and rewards distribution model. Physical infrastructure can include Wi-Fi stations, surveillance cameras, servers, etc.
Several projects are working on these initiatives, starting from Helium and ending with well-known projects like Filecoin and IPFS. However, the market is still in its early stages, as mass adoption is expected to occur when major players in physical ecosystems, such as Nokia, Ericsson, or Huawei, take an interest in this direction.
Anna Datsenko, COO at IdeaSoft

Summary

Now, you know what is DePIN. It is not just a trend in the crypto world but a step forward in integrating blockchain into our daily lives. With its potential yet to be fully tapped, the future of DePIN looks bright, opening up new opportunities in the crypto world.

DePIN is not something new in the crypto market. At IdeaSoft, we possess vast experience working with such projects and are glad that trends are returning. If you want to implement the DePIN technology, we are ready to help you with this venture!

How to Reduce Software Development Costs

The issue of reducing the cost of developing a software product is of interest to everyone who has a software project. We all see that the modern digital world makes the rules and if a company wants to be successful it cannot refuse software solutions. Hence, businesses have to spend huge amounts of money to maintain an innovative environment. In this article, we have collected the most effective ways to cut the cost of software development, which will let you save money while maintaining the quality of your product.

Outsource your software product development
Choose Agile software development approaches
Develop only essential features
Hire a complete development team
Involve QA specialist in the development process
Work with expert developers
Additional ways to reduce the cost of software development
Don’t prefer price over quality

Outsource your software product development

We should start with this advice, even if it seems obvious. According to Statista, the worldwide outsourcing market reached $92.5 billion in 2019. Outsourcing has long been considered a proven way to lower costs for a company, especially when it comes to software product development. If you are not going to deploy a large long-term project, then there is no point in building a development team within the company. The difficulty lies in the selection of developers, as well as in ensuring workspaces and constant workload. By outsourcing your project, you pay for the work done and focus on business tasks, leaving technical issues to an outside team.

Another bonus of outsourcing is the possibility to choose a software development partner from companies around the world and win a good price. It’s no secret that developer rates vary widely. This is a feature of the global IT market. So why not take advantage of this? According to Clutch’s research, among the main reasons why small companies outsource their projects, increasing business efficiency is in the first place. It is well known that the services of engineers in the US and Western Europe are more expensive than those of developers in Eastern Europe. By reducing the cost of developing your software product, you can invest this money in business development and get more. According to the SkillValue study which determined the best developers in terms of price and quality, it is most profitable to outsource projects to Slovakia, Poland, Hungary, and Ukraine. Now you know where to search for an outsourcing software development company.

Choose Agile software development approaches

Agile combines flexible approaches to software development. This means that changes to a project can be made directly during the development process. Communication between a development team and a customer is ongoing, so the client can see at what stage of the development cycle his product is and whether it meets his expectations. According to the Harvard Business Review, 60% of companies experience profit growth after adopting Agile. Agile is especially valuable for custom web development, where requirements often evolve based on user feedback and business needs.

Getting back to cost savings, why is flexibility important? If you are developing a product from scratch, it is almost impossible to plan everything in advance. You may miss some features or suddenly realize that you want to change the structure of your app. Waterfall approaches won’t give you this opportunity. Using the fixed price services, which assumes a fixed scope of work, you will see the result at the end of development and who knows if it will be exactly what you wanted. Of course, a development team can refine your product afterward, but you will have to pay extra for this. By using agile development models, you can adjust the work of engineers without accumulating issues.

Develop only essential features

Project requirements often become a stumbling block in software product development. The fact is that the result directly depends on how clear your requirements are. In order to compile a list of necessary product features, you need to carry out a lot of analytical work, including determining business goals, studying the market, identifying and analyzing your target audience, and studying competitors. Next, you need to prioritize features and separate essential features from the so-called “nice-to-have” ones. Always start development with core product features, it is much cheaper and more efficient. According to statistics, usually, users don’t use even half of an application’s functions. If you don’t want to throw money away, don’t try to develop everything at once.

How to prioritize features and find the essential ones:

Create user flow, the path users take when interacting with your product.
Make a list of features that your product should have at each stage of interaction.
Give priority to each feature, where High priority is fundamental functions without which your app or platform can’t work; the medium priority is the functions that you’d like to have, and that make your product special; low priority is features that require additional elaboration or complex implementation.
Visualize functions using a user flow matrix, where you have a horizontal line showing the main stages of your user flow, and below each stage are functions dedicated to that stage. Then, draw a vertical arrow pointing down from high priority to low priority at the bottom.

Now you can see which features need to be developed first. The rest of the attributes should be considered and can be added later if you deem necessary. Don’t forget about some viable features that are specific to your market. For example, if you are developing a financial platform, there may be additional legal requirements for the product. Or if you are developing a mobile application that you are going to promote using app stores, remember that it must meet the requirements of a particular store.

Hire a complete development team

Many people believe that in order to reduce the cost of software development, it is enough to reduce the number of participants in the process. Why doesn’t it work? First, the development process involves different specialists who work in different subject areas. Of course, you can hire a couple of developers and shift all the tasks of writing requirements, coding, and testing to them, but let’s be honest, what result can you expect in such a situation?

Second, things can get even worse if your project is big enough and you are trying to implement it with not enough people. Before abandoning an extra specialist, weigh all the risks, evaluate the scope of work. Having saved on hiring an extra specialist, you can lose the quality of the product and, as a result, you will have to redo everything. It doesn’t seem like savings. Extra specialists should not be underestimated, especially when it comes to QA engineers and testers.

Involve QA specialist in the development process

Another important point is that testing is crucial at all stages of product development. By postponing tests until the very last stage, you can accumulate a large number of bugs, which will be much more laborious to fix. Even if you work with some of the most talented developers in the world, you still need testers to make sure that your product is functioning correctly, not only from the code side but also from the user side. Here is a brief description of what a tester does at each stage of software product development:

The stage of collecting requirements – studying a product, identifying poorly defined elements, helping to compose user stories.
Design stage – identifying any logical conflicts in design.
Development phase – identifying any deviations from the user’s path, instant testing of new features.
Testing stage – testing a product as a single system, cross-browser/cross-operating system testing.

It is well known that it is impossible to create software without bugs, the key is to fix them as quickly as possible. So, if you really want to reduce development costs take the role of testing seriously. And here’s an extra tip. If you need to hire a tester, you can still reduce the number of hours spent testing with automated tools. Ask your development team to use automated testing where it is possible to minimize the chance of human error and speed up the entire process.

Work with expert developers

Once again, one of the most effective ways to reduce software development costs is to make the fewest mistakes and create the highest quality product the first time around. If you get a poor implementation of your idea, then you will spend more money and a lot of time on revision. An even worse scenario is if you release a product that doesn’t meet users’ expectations and they reject it. This makes it very difficult for you to re-earn the trust of your target audience. Hence it is very important to work with an expert development team that has a proven experience and a portfolio of successful projects.

If you want to get an excellent result, the main factors in choosing a software development partner for you should be the ratio of the company’s expertise and developer rates. By focusing only on price, you can lose the quality of your software product. So, having chosen a region that suits you in terms of the price range (find average hourly rates of developers by region in the table below), start evaluating companies’ expertise. Look for companies with projects similar to yours, study customer reviews, technologies that companies work with, and make sure that a company has in-house developers, the experience of which the provider can guarantee.

Developer rates by region — Average developer rates by region Source: SharpMinds

Additional ways to reduce the cost of software development

In addition to the above methods, you can find other ways to reduce development costs, based on the characteristics of your project. An experienced technical specialist can help you with this. Here are some other ways that can suit your project.

Use open-source software. This option is not suitable for everyone, some projects require technologies with paid tools or certificates. But if the issue of price is dramatically important to you, you can opt for open source solutions, which are often free and effective.
Involve DevOps. If you are going to create a product in one go or have multiple products, it is critical to get it right. I this case you need to implement DevOps methods. The integrated work of specialists from different departments will allow you to build a more efficient and high-quality development process. By automating some operations, you can create a unified development environment, speeding up each step of the process.
Develop an MVP. MVP is a product with basic functions, ready to market. Then you win the first users and collect feedback to find out which additional features should be developed and which should not. MVP lets you reduce the time-to-market, cut the cost of development, and choose the further direction of development based on the real needs of your customers. Companies such as Uber, Snapchat, Foursquare, and Spotify have started with MVPs.

Don’t prefer price over quality

As a final point, we can say that there are different ways to reduce software development costs. The key is not to lose quality in the race of a lower price. You should understand that there is always a certain minimum of how much a quality product can cost. If some company offers you a price below this minimum, then you need to be prepared for the fact that the result will be far from ideal. An experienced development team will always find ways to cut costs while maintaining the quality of development, and such a team knows where the limit of these reductions is. Feel free to contact us for a project estimation or technical consultation. IdeaSoft experts are always happy to be a part of new interesting projects.

What is Web 2.5 and How Is It Different from Web2 and Web3

In an era marked by rapid technological advancements, the internet has undergone a remarkable journey of transformation. As we navigate this digital generation, the term “Web 2.5” has emerged as a captivating subject of discussion and exploration.

This article delves into the intricacies of Web 2.5, shedding light on its significance in the ever-evolving landscape of the Web. As curiosity about the Internet’s evolution grows, we explore what makes Web 2.5 different from Web 2 and Web 3. Join us as we unravel the key features of Web 2.5 and its practical implications.

Want to empower your web2 solution with blockchain?

IdeaSoft offers expert consultation and tailored solutions to help businesses navigate the Web 2.5 landscape successfully. Our team can provide guidance on technology integration, user-centric design, and strategies for harnessing the capabilities of Web 2.5 to achieve your specific goals. Feel free to reach out to us for personalized guidance.

Table of content:

Understanding the Evolution of the Web 2.5
Web 2.5: The Intermediate Stage
Contrasting Web 2.5 with Web 2
What makes Web 2.5 different from Web 3
Practical Implications of Web 2.5
Key Web 2.5 Insights for Product Owners
Building and Using Web 2.5 Applications
Summary

Understanding the Evolution of the Web 2.5

To understand what Web 2.5 is, it’s essential to first establish a foundational understanding of its predecessors. Web 2, often referred to as the “Social Web” marked a pivotal shift in the internet’s narrative. It introduced concepts like user-generated content, interactivity, and collaboration, giving rise to influential information platforms such as Facebook, YouTube, and Wikipedia.

This era transformed the web into a dynamic space where users played an active role in content creation and sharing.

Web 2.5, while not universally defined, can be seen as an intermediate stage between Web 2 and the anticipated Web 3. It likely encompasses advancements like augmented reality, virtual reality, and enhanced data analytics, offering users more immersive and personalized digital experiences. For businesses transitioning to Web 3, outstaffing Web3 developers is an efficient way to access specialized expertise and accelerate project timelines.

As we approach Web 3, the focus is on making web data more machine-readable and interconnected with techs like blockchain and advanced AI. This understanding guides our exploration of the key features of Web 2.5 and their role in the Internet’s future.

Web 2.5: The Intermediate Stage

Web 2.5 represents a pivotal phase in the ever-evolving landscape of the internet. It can be characterized by several key features that set it apart from Web 2 and Web 3. This intermediate stage builds upon the foundations of Web 2, where user interaction and content creation were paramount, but it also integrates emerging technologies that foreshadow the forthcoming Web 3.0.

The key features of Web 2.5 include an increased emphasis on user immersion and personalization. This phase brings forth augmented reality (AR) and virtual reality (VR), which aim to blur the lines between the digital and physical worlds. Additionally, Web 2.5 leverages the capabilities of artificial intelligence (AI) and blockchain technology. AI enhances user experiences by understanding behaviors and preferences, enabling more tailored content recommendations. On the other hand, blockchain bolsters security, transparency, and trust in transactions, revolutionizing various industries, including finance, supply chain, and digital collectibles.

Web 2.5 is often regarded as an intermediate stage due to its transitional nature. It uses emerging tech for better user engagement but doesn’t fully adopt the decentralization and semantic web aspects of Web 3. Instead, it acts as a bridge between Web 2 and the future, where blockchain, AI, and decentralized systems shape the Internet’s evolution. As we delve deeper into Web 2.5, we’ll uncover how these technologies redefine online experiences and pave the way for the internet’s next chapter.

Contrasting Web 2.5 with Web 2

When comparing Web 2.5 to Web 2, several notable distinctions emerge. Web 2 marked a significant shift with the widespread adoption of social media, cloud computing, and mobile devices, resulting in the continuous introduction of new apps to mobile app stores. However, Web 2.5 goes beyond introducing immersive technologies like AR and VR. These innovations reshape digital content interaction, providing dynamic and interactive experiences that extend beyond conventional text-based communication.

Another notable contrast lies in data ownership and control. In Web 2, data resided within tech giants that monetized user-generated content and interactions. Web 2.5 places a stronger emphasis on individual ownership and control of personal data. Tech companies in this phase often focus on data security, privacy, and consumer consent. This gives individuals more agency over their digital identities.

What makes Web 2.5 different from Web 3

While Web 2.5 represents a significant advancement in the evolution of the Internet, it is important to compare it to the emerging Web 3 and its applications to appreciate the core distinctions between these phases. One of the fundamental differences lies in the concept of decentralization.

Web 3, often associated with the “Decentralized Web” or the “Semantic Web,” envisions a digital landscape where data and applications are distributed across a network of nodes, eliminating the need for central authorities. In contrast, Web 2.5 retains certain centralized elements, especially in the deployment of AR and VR experiences, which may rely on centralized servers and platforms for content delivery and interaction.

Blockchain technology plays a crucial role in distinguishing Web 3 from Web 2.5. Web 3 emphasizes leveraging blockchain for trust, security, and transparency across various sectors, such as finance, supply chain, and identity management. Blockchain serves as a decentralized ledger, ensuring the security and integrity of transactions and data, a feature that differs from Web 2.5.

In contrast, when using Web 2.5 for blockchains, it allows for a certain level of centralization, making it more user-friendly and accessible. This approach allows individuals to gradually adapt to blockchain technology without feeling overwhelmed by its complexities, which differs it from the more fully decentralized approach witnessed in Web 3.

Web 3 also incorporates advanced artificial intelligence (AI) and machine learning (ML) technologies to enhance user experiences and enable intelligent data analysis. These AI and ML capabilities empower Web 3 applications to understand, interpret, and respond to user behavior and preferences. In contrast, Web 2.5 primarily focuses on adopting AR and VR technologies.

In summary, while Web 2.5 represents a significant step forward in user immersion and personalization, Web 3 introduces a more profound paradigm shift with its emphasis on decentralization, blockchain, and the incorporation of advanced AI and ML technologies. These core distinctions between Web 2.5 and Web 3 illuminate the evolving landscape of the Internet and offer unique opportunities and challenges in each phase.

Practical Implications of Web 2.5

In the era of Web 2.5, businesses face the challenge and opportunity of adapting their strategies to harness the full potential of emerging technologies.

Our experts have identified three key technologies where Web 2.5 holds the most promise and potential for businesses.

Blockchain Integration

Incorporating blockchain technology to enhance security, transparency, and trust in transactions can involve various applications. This includes utilizing blockchain for supply chain management, facilitating secure cross-border payments, and verifying the authenticity of digital assets and collectibles.

As one of the examples of successful integration of blockchain, we can see the Hoper waste management platform developed by the IdeaSoft team. The platform combines waste management collection and a social network gathering people into communities. The primary mission behind the project was to encourage people to clean overstock trash and garbage around polluted spaces to provide safer environments.

For this purpose, we created a reward system based on Hopercoin tokens. Platform users receive tokens for cleanup cases. Then they can exchange Hopercoin for the products and services offered by the platform partners and investors.

Tokenization

Tokenization in the context of Web 2.5 carries numerous practical implications with the potential to reshape our digital experiences. It empowers individuals with true ownership and control over digital assets, reducing reliance on centralized platforms. In supply chain management, it bolsters transparency by tracking products and verifying authenticity. Tokenization also streamlines cross-border payments and fuels the gaming industry by allowing true ownership of in-game assets. This way, its promotion of decentralization reduces the need for intermediaries in various industries.

One of the most prominent and known use cases of asset tokenization nowadays is represented by NFT-based platforms. For instance, BridgeTower is a global marketplace built on a proprietary technology stack that
uniquely bringing products constructed with regulatory compliant adherence in order to enable an institutional gateway to Staked Securities, Turnkey Customized Institutional Staking, Financial Products, and Web 3.0 entities. The platform utilize NFT technology to tokenize those assets and enable seamless access for users.

Fintech

In fintech, Web 2.5 introduces many practical benefits. Advanced data analytics and machine learning algorithms in Web 2.5 enable fintech companies to gain deeper insights into user behavior and preferences, leading to more personalized financial recommendations and risk assessments.

These technologies also contribute to improving overall system security and minimizing fraud. Additionally, Web 2.5’s focus on interoperability allows for seamless integration of financial services across platforms and applications, streamlining processes like cross-border payments and lending.

Blockchain integration into fintech facilitates asset treacebility and transparency while enabling automated asset issuance. One of the most known examples of a successful implementation of such integration is Securitize platform which is a full-stack technology solution for issuers of digital securities. The platform enables the compliant trading of private securities on public blockchains and multiple exchanges.

Key Web 2.5 Insights for Product Owners

As you can see, many businesses can use these technologies to compete and offer something special in the open Web 2.5 era. Yet, successful integration often relies on web developers’ and designers’ expertise and guidance. They play a pivotal role in transforming abstract ideas into tangible and engaging experiences. Below, we present some key considerations for them to harness the capabilities of Web 2.5:

Skill Development

Web developers and designers need to get expertise in blockchain development, smart contract programming, and decentralized application (DApp) design. These skills are essential for creating secure and user-friendly blockchain-based applications.

User Experience

Designers should focus on delivering intuitive and visually appealing user interfaces for blockchain-powered platforms. User experience (UX) becomes crucial in ensuring that users can interact seamlessly with decentralized applications.

Constant Tech Stack Enhancement

Addressing scalability challenges is vital, as blockchain networks can face limitations in transaction processing speed and cost. Developers need to explore solutions to enhance scalability and user accessibility.

Businesses that opt for developing and using Web 2.5 applications can position themselves at the forefront of the digital revolution. Web developers and designers play a pivotal role in creating user-friendly and scalable blockchain applications, ensuring a smooth transition into the Web 2.5 era.

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Building and Using Web 2.5 Applications

The complexities of Web 2.5 might appear daunting, so it’s essential to illustrate their practical applications through real-world examples. Many businesses have already embraced blockchain technology and actively use Web 2.5 features, providing tangible evidence of the benefits of this evolving digital landscape. Let’s check the most prominent examples:

Financial Institutions

Traditional banks and financial institutions are incorporating blockchain technology into the global economy for cross-border payments, settlement systems, and even the development of their cryptocurrencies.

Supply Chain

The supply chain industry is increasingly using blockchain technology, influenced by Web 2.5, to improve transparency, traceability, and security in complex networks. Blockchain keeps an unchangeable record of all transactions and product movements, helping stakeholders track products in real-time from where they start to where they end up. This technology ensures products are genuine, reduces the risk of fraud, and cuts down on errors in supply chain records. By enhancing visibility and trust, blockchain streamlines processes, reduces delays, and boosts supply chain resilience, making it a valuable tool for the whole industry.

Tech Giants

Large tech companies like IBM, Microsoft, and other famous brands offer blockchain solutions for businesses, enabling them to develop and deploy blockchain applications.

NFT Marketplaces

NFTs represent a groundbreaking blockchain application that elevates digital content and assets, typically associated with Web2 platforms, to a whole new level. NFTs bring together the concepts of true ownership and decentralization from the Web3 era, and they come with various utilities that grant creators unparalleled control over their creations.

As you can see, many businesses across various sectors have already recognized the advantages of using Web 2.5 instead of Web 2 and Web 3 and are actively leveraging its advantages.

Summary

The changing internet landscape from Web 2 to Web 2.5 and the emergence of Web 3 brings both exciting opportunities and challenges. Web3 development cost optimization becomes crucial as businesses explore decentralized solutions. While Web 3 holds immense potential, its decentralized nature and reliance on blockchain technology can introduce complexities, impacting development costs.

If you want to understand the difference between Web 2.5, Web 2, and Web 3 better, or if you need advice on how these technologies can benefit your business, don’t hesitate to reach out to IdeaSoft experts. Our team can provide detailed consultations and customized solutions to help your business grow, including Bento Box Web Design.

Security Tokens: Transforming Finance and Investment

At present, there’s a big fuss made around security token offerings (STO) in the crypto asset community. From an operational and a regulatory perspective, these tokens surely have a huge potential to reshape and optimize the current fundraising mechanisms.

But does it mean the security token era is the future of the finance and investment industry?

According to the recent market study by Deloitte, the answer is YES. Security tokens are expected to become the securities of tomorrow, as they can provide clear benefits in terms of transparency, efficiency and enhanced liquidity. Moreover, successful projects, such as Securitize, already getting the leading positions in the world of security assets.

In this article, we’ll make a comprehensive overview of security tokens in crypto, covering their benefits and key market insights in the STO niche. Additionally, IdeaSoft’s specialists will underline the major development aspects in building a robust digital securities ecosystem based on our recent project – issuance platform development for the Securitize project.

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Whether you’re interested in launching a custom solution for asset tokenization or need expert support for the existing product, our developers will get you covered. Contact our professional development team and find out how you make the most of your security token project today!

Table of content:

Security Tokens Market Overview & Its Future Perspectives
Why Do Security Tokens Matter?
Limitations & Benefits of Security Tokens
Our Expertise: Securitize Project
Summary

Security Tokens Market Overview & Its Future Perspectives

The real-case successful examples of security tokens, such as Polymath, Harbor, tZero and Securitize have uncovered the immense potential of this niche across many industries. The recent overview by Meticulous Research forecasts the tokenization market value to grow from $3.76 billion in 2023 to $13.23 billion by 2030. Such an impressive market projection encourages businesses to consider the ways on to invest in security tokens and the business benefits of these projects.

In the finance and investment niche, the significant market growth of security tokens is explained through the increasing awareness, wide adoption of this technology and its ability to reshape traditional investment mechanisms. According to Andrii Lazorenko, the CEO and co-founder of the IdeaSoft blockchain development company, the future of security tokens can be interpreted directly from their technical specifications.

“The unique feature of security tokens is their ability to “tokenize” the value of nearly any real-world asset, which can be easily managed and transferred through blockchain. So, once the regulatory requirements are put in place, their presence on the blockchain will become legal, significantly increasing the market capitalization.”
Andrii Lazorenko, CEO and co-founder of IdeaSoft

An intensive market expansion over the next few years is not the only factor that identifies the success of security token projects. The legalized digital tokens are expected to facilitate swift and streamlined financing processes while keeping them fully secure and cost-efficient. For instance, individuals will have the ability to undergo a prompt Know Your Customer (KYC) verification, whitelist their digital wallets, and execute transactions efficiently. In fact, this becomes critical for small and medium-scale projects that need to quickly acquire the capital they need for the successful product development and release.

Why Do Security Tokens Matter?

In our recent blog post, the IdeaSoft specialists already discussed the key differences between digital security tokens and utility tokens and their role in blockchain projects. Here, we’ll analyze the key aspects of why security tokens are important and their potential in the finance and investment landscape.

Security tokens and blockchain can bring numerous benefits to large corporations and prospective startups. Once integrated, these technologies can automate and optimize the asset management and exchange processes, making them fast, simple and more accessible compared to the traditional mechanisms.

Along with seamless and efficient trading, adopting a crypto security token will enable easier access to the global markets, helping companies improve their development and growth.

Unlike other digital solutions, crypto security tokens also offer a decent transparency level to its users and ensure high-level security based on a strict regulatory background. In particular, such tokens need to comply with the Know Your Customer (KYC) and Anti-Money Laundering (AML) laws, as well as the numerous regulations of other relevant jurisdictions.

Finally, security tokens are the game-changers in the financial industry, as they can unlock huge liquidity pools for traditional systems. This benefits all the network participants: the issuing company and the owners of security tokens.

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Limitations & Benefits of Security Tokens

The actual value of any technology highly depends on the advantages and potential limitations it can provide for your business. Below, our experts have made a comprehensive summary of the key pros and cons of digital security tokens, explaining their efficiency from the business development standpoint.

What Are the Benefits of Security Tokens?

Compared to traditional forms of securities, security tokens can uncover numerous advantages for a company or business. Below, IdeaSoft experts have uncovered the core aspects of how companies and enterprises can benefit from security token solutions.

The Key Advantages of Security Tokens

Global Accessibility	Blockchain technology allows for the direct trading of security tokens, in which no intermediaries are required. This potentially opens up numerous investment opportunities to broader and more diverse audiences.
Enhanced Efficiency & Automation	Smart contracts enable automated compliance with regulatory requirements, which helps to reduce administrative overhead and streamline the issuance and transfer process.
Cost-Effectiveness	The automation and optimization benefits provided by security tokens and blockchain can also result in greater cost efficiency. In particular, this becomes possible due to lower issuance costs and reduced fees associated with trading and settlement.
Improved Compliance & Security	Built-in compliance features of security token can ensure that only eligible investors can participate in offerings, helping issuers adhere to regulatory requirements. Additionally, the security features of blockchain technology can protect against fraud and unauthorized changes to ownership records.
Accessibility for Small and Medium-sized Enterprises (SMEs)	With crypto security tokens, SMEs can raise capital in a more streamlined and cost-effective manner compared to traditional fundraising methods. This can lead not only to optimized cost expenses but also to drive larger investments for development and growth.
Fractional Ownership	Unlike other digital tokens, security tokens provide fractional ownership solutions for high-value assets (for instance, equity, dividend, profit shares, voting, or buyback rights). This also allows to engage a larger number of investors, including those that were previously out of reach.
Increased Liquidity	Digital security tokens can potentially improve liquidity in traditionally illiquid markets across various industries (for ex. real estate). This is mainly achieved through the optimizations of the exchange process, which becomes more flexible, accessible and much faster compared to the traditional options.

Security tokens open up a wide range of improvements from both business and client perspectives. From enhanced efficiency, transparency and process automation to improved liquidity and global market access – you’ll get the first results right after its integration.

Potential Limitations of Digital Security Tokens

Along with the security token advantages, it’s also important to keep its limitations and architecture specifications in mind. Below, IdeaSoft developers have covered the major characteristics of security tokens that should be considered before the project development.

High Entry Barrier. Only accredited investors can whitelist a wallet and purchase security tokens, which potentially narrows the audience number. To pass the accreditation, investors need to comply with the regulatory authorities and the laws of the respective countries.
Small Secondary Market: This problem stems from the first issue. Since there are relatively few accredited investors worldwide, even if you manage to buy a security token, selling it can be quite challenging. Holding onto it for a long time may be necessary because of limited market liquidity.
Financial Literacy. To successfully pass accreditation and start engaging with security tokens in crypto, an individual must possess a high level of education, significant experience in financial instruments, and capital.
Market Competition. Typically, accredited investors start with well-established and trending assets like Tesla stocks and others. The token investments on niche-specific assets like for example security tokens of Ethereum, can be lower due to the lack of its awareness and asset volatility.

Knowledge and awareness of token specifications is one of the key points that can identify the project’s success. At IdeaSoft, our developers have deep expertise in tokenized technologies and proven experience in building security token exchanges. Our team creates a business-driven product that fully covers the specifications and benefits of security tokens.

Our Expertise: Securitize Project

One of the recent blockchain-based development projects delivered by IdeaSoft is the tokenized securities platform for Securitize. This tech-driven solution enables a seamless, compliant cross-chain trading of private securities on public platforms and multiple blockchains.

Its integrated solutions, such as Digital Securities Protocol (DS Protocol), functional investor dashboard and multi-blockchain support, enable seamless and fully secure cross-border transactions, outstanding efficiency and excellent user experiences.

How to Issue a Security Token with Securitize?

Our team has created a straightforward algorithm for digital security issuance, management and exchanges, which consists of the following stages:

Step 1: Secure Custody of Cryptocurrency. Acquire the desired amount of cryptocurrency, such as Ethereum (Ether), and secure these digital assets by putting them into a secure custody solution.
Step 2: Audit and Proof-of-Reserves. Engage a service like Chainlink to ensure transparency and provide proof-of-reserves for the cryptocurrency held in custody.
Step 3: Tokenization. Tokenize your cryptocurrency through the Securitize platform (or its alternative), so that one token can now represent the value of the equivalent amount of Ether securely held in custody.
Step 4: Security Token Offering (STO). Offer the newly created security tokens to potential investors. In such a case, a security token performs as a tradable financial instrument, similar to a bond with specific conditions. Additionally, it represents ownership of the underlying cryptocurrency held in custody.
Step 5: Regulatory Compliance. Ensure that the security token offering complies with relevant securities regulations and requirements.
Step 6: Investment. Investors can purchase the security tokens, effectively gaining exposure to the cryptocurrency (e.g., Ether) held in custody.
Step 7: Asset Management. Manage and monitor the cryptocurrency holdings in custody to maintain transparency and security.

Today, the issuance platform Securitize is known as the first and only platform to fully integrate compliance protocol with regulated marketplace ATS and to enable live trading security tokens. The IdeaSoft developers helped to build an efficient, secure and highly profitable solution that has already revolutionized the security token market.

Summary

Security tokens open up a wide range of opportunities for business development and growth. Their high liquidity potential, and accessibility and effectiveness enable access to the benefits that are unavailable for utility tokens, or fiat currencies.

Now it becomes obvious that crypto security tokens are the future of finance and investment. Over the next years, more companies are expected to invest and develop their asset tokenization solutions to increase their operational efficiency and business competitiveness. ERC 404 tokens are set to play a significant role in this evolving landscape.

Utility vs Security Token: Differences and How to Choose

With over two decades of presence in the market, digital tokens has become an essential component of blockchain solutions. Similar to coupons, casino chips or company stocks, they act as a cash substitute and represent a specific amount of digital resources you can own, transfer or redeem.

Alongside commonly known NFTs and payment tokens you’re certainly aware of the other trending assets, such as utility tokens and security tokens. So, in this article, the dedicated IdeaSoft experts will explain the difference between these digital tokens and their functions in the ever-changing crypto market. Also, you will find out whether utility or security token is the right solution to meet your business goals.

Are you looking for digital token integration experts? Contact us right away to discuss how to successfully implement utility and security tokens into your business!

Table of content:

Digital Tokens: Market Outlook & Benefits
Security Tokens: Definition & Specifications
Utility Tokens: Meaning & Specifications
Utility vs. Security Token Comparison: A Quick Overview
What’s Common Between Security and Utility Tokens?
The Key Differences Between Utility and Security Tokens
Which Token Type Is Better for Your Blockchain Project?
Summary

Digital Tokens: Market Outlook & Benefits

As of September 2023, the global cryptocurrency market cap has reached $1.034 trillion, which is over a 150% increase compared to September 2020 (CoinMarketCap). And, the rising trends for asset tokenization, DeFi, web 3.0 and cross-chain solutions are expected to become the main growth factors for the market’s success.

crypto market charts, crypto overview, utility vs security tokens — **Source**: Coinmarketcap

Despite the decades of presence on the market, digital tokens become truly popular only in recent years. Today, you can use digital tokens to buy real-world assets, pay university tuition and hotel accommodations, make investments and create crypto exchange solutions.

The cross-industry adoption of digital tokenization brings a whole bunch of benefits from a business standpoint. Digital tokens allow for seamless, efficient, and secure transactions while remaining highly accessible, unlocking substantial liquidity from illiquid assets.

Depending on the technical characteristics, use purposes and value for the particular crypto project, companies can choose from a wide range of token types. So, let’s now review the key highlights of utility and security tokens to identify which one can fully meet your business goals and needs.

Security Tokens: Definition & Specifications

A security token is a digital representation of real-world asset ownership, such as the company’s equity or bonds, real estate or other tokenized tangible or intangible objects that have been verified on the blockchain. Typically, it is directly related to the company’s value and growth, providing the owners with dividends, voting rights and other benefits. That is why, security tokens are often viewed as investments.

It’s also important to admit that the tokens are viewed as securities only when they meet the strict conditions of the SEC (the Howey test). This confirms that the transactions under the security tokens are qualified as an “investment contract” and would therefore be subject to U.S. securities laws.

However, it’s not the only type that has gained huge recognition in today’s security token landscape. Utility tokens are another asset class that is currently trending and has been also applied across a wide range of projects. So, to determine which – security or utility token – can better align with your project requirements and needs, let’s now review the specifications of the latter one.

Utility Tokens: Meaning & Specifications

Unlike the other types of tokens, a utility token is much more than just a payment solution for blockchain. It enables owners to access the services, features and offerings on a decentralized platform, acting as a lifeblood for a specific blockchain network. Utility tokens are an essential tool for nearly any blockchain ecosystem, which is more focused on user engagement and decision-making rather than asset ownership.

Once issued by a company, utility tokens perform the role of digital coupons, that can be redeemed in the future for discounted fees or provide access to a product features or service. It’s also important to say, that utility tokens are not used for investment purposes, as they’re relatively underregulated and can avoid federal laws governing securities.

An excellent example of digital utility tokens is Ether (ETH), which are aimed to enhance smart contract execution and improve the on-platform transactions within the Ethereum network.

Basically, these are the most important aspects of the utility vs. security token overview, that will help you to understand their usage specifications and identify the right solution for your project.

Utility vs. Security Token Comparison: A Quick Overview

As previously described, security tokens typically represent ownership or assets with intrinsic value and are often subject to regulatory oversight. In contrast, utility tokens are primarily designed to provide access to specific products or services within a blockchain platform, offering functionality rather than ownership.

Let’s now review their main differences to enhance our understanding of this technology.

Utility vs. Security Token Comparison, security or utility token, utility tokens and security tokens

What’s Common Between Security and Utility Tokens?

Before we start diving into the differences between a utility token and a security token, let’s briefly review the interception areas they feature. This can help you to better understand their role in blockchain development, as well as the perspectives they offer upon the integration.

Digital Nature: Both security and utility tokens relate to digital assets, represented by cryptographic codes on a blockchain.
Blockchain-Based: They are built on blockchain technology, which ensures transparency, immutability, and security of transactions.
Peer-to-Peer Transfers: Both types of tokens can be transferred without the need for intermediaries.
Programmability: Both utility and security tokens can have programmable features, thanks to smart contracts, enabling automated actions when certain conditions are met.
Potential for Liquidity: While security tokens are typically associated with ownership in an underlying asset (like equity in a company), they can be traded on platforms that facilitate secondary market trading. Similarly, utility tokens can often be bought, sold, and traded on exchanges.
Regulatory Considerations: Both types of tokens may be subject to regulatory considerations, but security tokens are more likely to be classified as securities and thus subject to stricter regulations.

Along with the commonalities of each, let’s explore the unique features that make security and utility tokens stand out.

The Key Differences Between Utility and Security Tokens

To find out the best-matching technology for your project, it’s always important to check the strong sides and potential drawbacks of each option available. IdeaSoft specialists have created a simple and straightforward comparison of security token vs. utility token, that will help you make the right choice.

Security Tokens

Main Advantages of Security Tokens:

Fundamental Values. Security tokens provide fundamental values such as profit shares, voting rights, legal security and so much more, which makes them an attractive solution for a wide range of projects.
Regulation Compliance. From the regulatory standpoint, security tokens are better than utility as the prior ones have to pass the strict conditions of the SEC (The Howey Test).
Recovery Property. Security tokens feature recovery protocols, ensuring the safety of the issued assets.
Straightforward Integration. Simple integration of these tokens allows their smooth integration into different markets and networks.

Potential Drawbacks of Security Tokens:

Challenging Compliance Process. Meeting regulatory requirements, such as conducting audits and filing reports, can be complex, time-consuming, and expensive.
Market Volatility. Depending on the underlying asset, security token values can still be subject to market fluctuations, similar to traditional securities.

Utility Tokens

Main Advantages of Utility Tokens:

Enhanced Functionality. Utility tokens can enable process automation through smart contracts, thus contributing to the platform’s efficiency and profitability.
Better Flexibility. They can be designed for a wide range of purposes, from accessing products, services or features to participating in voting or governance mechanisms.
Boost the Platform Usage. Utility tokens allow businesses to improve the platform’s usability, helping users to easily access the required services or products.
Broader Audiences. These tokens can also attract a wide user base, including those interested in using the platform’s services rather than strictly for investment purposes.

Potential Drawbacks of Utility Tokens:

Limited Investment Potential. Unlike security tokens, utility tokens do not provide direct ownership or profit-sharing rights, which makes them less attractive to certain investors.
Potential Regulatory Uncertainty. The regulatory frameworks for the utility tokens are in the early stages of development, which can cause significant challenges in the regulatory area.

The detailed comparison of utility token vs security token plays a key role in evaluating their potential value from a business standpoint. Now, you’re fully ready to choose the best digital token that aligns with your project requirements and goals!

Which Token Type Is Better for Your Blockchain Project?

Having explored the specifications of each token, you’re all set to find out what solution – utility tokens vs security tokens – can better correspond to your project needs. At IdeaSoft, our dedicated blockchain developers have proven expertise with crypto technologies in fintech, blockchain, B2B and B2G, and many other industries. Regardless of the product’s complexity and arising challenges, we’ll provide a professional assistance in building a robust and secure solution for your business.

So, if your primary goal is to provide access to specific services, products, or functionalities within your platform or ecosystem – consider the utility token application. Typically, they help products to facilitate transactions, provide accessibility, and enable better user engagement within a network.

However, if you want to represent ownership in an underlying asset, such as equity in a company, profit-sharing, or debt – choosing the security tokens will be a better fit. They’ll provide investors with the potential for returns, as the token’s value is estimated based on the company’s valuation.

To succeed in digital token integration, evaluating the project specifications, business goals and consumer needs must be the top priority for your business. Our dedicated experts at IdeaSoft always conduct comprehensive product research and market analysis, helping to identify which token, utility or security, will align with the company’s goals and technical specifications of your crypto solution.

Summary

Though each of these tokens is widely applied in blockchain, the use and purpose of utility and security tokens are completely different. So, before investing in its integration, businesses should make a detailed utility/security token comparison to understand which will better serve their goals and needs. While security tokens work best for fundraising and investments, utility tokens can unlock access to special services, products, or other related assets. ERC 404 tokens provide an innovative approach for specific use cases within this ecosystem.

With cross-industry experience and deep expertise in blockchain, we help our clients to identify, develop and implement the most efficient solutions, technologies and innovations in their crypto projects.

RWA (Real World Assets) Explained

Realizing the potential of RWA tokenization in crypto, the traditional finance giants (such as BlackRock, Fidelity and Hamilton Lane) and many blockchain-based startups (like Securitize, Tzero, etc.) have already got into the game. Moreover, thousands of tech companies are developing powerful DeFi for tokenized RWAs, hoping to become the next “unicorn” solution. However, an exceptional RWA tokenization project for crypto requires a deep understanding of the market, as well as profound knowledge of blockchain development.

Welcome to our guide where we describe how to tokenize real world asset in crypto and the burgeoning realm of DeFi real world assets. As pioneers in this field, our expertise is drawn from real-world experience, as evidenced by our successful fintech and blockchain development cases. Additionally, IdeaSoft experts will review the real-case examples of on-chain RWA solutions to help you better understand its potential for your business and the crypto industry as a whole.

Table of content:

What is Real-World Asset (RWA) Tokenization?
What Are the Advantages of Tokenizing Real-World Assets?
How to Get Started with RWA Tokenization: 5 Key Stages
RWAs and DeFi
IdeaSoft successful case study on RWA
Summary

Want to tokenize an asset? Don’t know where to start?

Learn the basics of RWAs, technology’s advantages and its limitations from our article! Or let’s schedule a call and our team will help you figure it out, and correctly draw up the requirements for your project

Traditional RWAs Limitations

Traditional ownership of real world assets (RWA) is fraught with limitations. These include:

Illiquidity. RWAs, such as real estate and physical commodities, often lack liquidity. It is difficult to buy or sell them quickly without a significant loss in value.
Fragmented Markets: Markets for RWAs are fragmented and localized, limiting access and making it harder to find buyers and sellers. This reduces market efficiency.
Complex Ownership Verification. Establishing and verifying ownership of RWAs requires extensive documentation and potentially lengthy legal processes.
Limited Accessibility. Investing in RWAs requires significant capital, making them less accessible to small investors.
Valuation Challenges. Determining the accurate value of RWAs can be complex and subjective, often relying on appraisals and estimations rather than transparent market pricing.

These limitations can hinder the efficiency and accessibility of investing in and managing RWAs. However, through the innovative approach of tokenization, these constraints can be overcome, paving the way for a more accessible and efficient ecosystem.

The market for tokenized assets can grow to as large as $10 trillion in this decade as traditional financial (TradFi) institutions continue to adopt blockchain technology. RWA tokenization is gaining momentum before our eyes.

What is Real-World Asset (RWA) Tokenization?

Real-world asset tokenization is the process of virtualizing real-world (tangible and intangible) assets into digital tokens that can be stored, managed and traded on a blockchain.

The entire concept of RWA tokenization is based on creating a blockchain-based digital investment solution for subjects that have value or a relevant physical existence. So far, the tokenization of real-world assets has been applied across many industries, covering real estate, vehicles, collectibles, fine art, noble metals, securities, stocks and bonds, etc. That said, no matter if you want to sell $100 million worth of Van Gogh’s “Starry Night” or buy the “shares” of an iconic Barbie’s Malibu DreamHouse – tokenized RWAs, will make it possible.

To understand how RWA tokenization works, let’s take the example of real estate. Traditionally, if someone wants to invest in real estate, they would need to buy a property outright or invest in a real estate investment trust (REIT). However, with the concept of tokenization, the ownership of the property is represented by digital tokens on a blockchain. Investors can then purchase and trade these tokens, allowing for fractional ownership of the property and increased liquidity. That is how tokenization is putting real-world assets on blockchains.

What Are the Advantages of Tokenizing Real-World Assets?

As we already know, the tokenization process allows the virtualization of the RWA ownership or legal rights in a crypto environment. But what are the real benefits of real-world asset tokenization?

From the business standpoint, the main gains of a solution built on real-world assets and blockchain include:

Faster and more flexible asset trading and exchange, which are not tailored to the “9 to 5” business shifts;
Increased liquidity, which means larger profits;
A larger pool of clients and investors due to the lower entry barrier;
Improved system security and trustability;
Enhanced business competitiveness.

At the same time, the RWA tokenization can benefit asset owners, investors and traders by providing:

Greater accessibility, as the only things needed to trade RWA tokens are the Internet connection and a digital wallet;
Allowing for lower fees and commissions, that only involve the minimal gas fees to instantly transfer the RWA tokens;
Reducing risks for assets sharing or trading due to the secure and transparent RWAs trading environment;
Facilitating asset exchange, storage and management within a decentralized system;
The direct trading mechanism involves only a seller and a buyer, and removes any other intermediaries (financial institutions or banks, appraisers, notaries, or any other related authority).

Therefore, the numerous benefits of real-world asset tokenization have proven the value and long-term prospectiveness of this technology in the crypto landscape.

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Successful Use Cases of Real-World Asset Tokenization

Learning the existing examples of RWA tokenization is an excellent chance to get some helpful insights and inspiration ideas for your future product. That is why, our blockchain experts at IdeaSoft reviewed the projects that gained huge popularity in the real-world assets and DeFi niche.

Fractionalized Real Estate Ownership

One of the earliest use cases of real-world asset tokenization enabled making real estate assets liquid and selling theirits ownership through blockchain-based tokens. The best-known example is the $18 million deal of Elevated Returns, a New York-based asset management firm.

Tokenized Artworks

By tokenizing the ownership of particular artwork prints, these can be offered for sale and, once redeemed – the physical piece can be delivered to the given address. As an option, the token’s ownership can be fractionalized and shared between multiple holders. For example, this is already offered by TheArtToken (TAT), which offers tokens that represent fractional ownership of Contemporary and Post War Art. The physical originals of these artworks are stored in a warehouse secured by the Swiss government.

Intellectual Property (IP) Tokenization

This technology helps to tokenize the IP ownership rights: patents, copyrights, design patterns, logos, trademarks, and trade secrets. According to the American Bar Association, the take-it-or-leave-it nature of tokenized rights can increase the market for IP rights, mainly by providing a legal, transparent, and secure trading landscape. Additionally, owners can advertise their IP broadly without the concern of experiencing expensive marketing or legal costs for unqualified purchasers. The examples of IP tokenization are commonly applied in the NFT trading landscape, where certain IP rights are attached to particular NFTs. For instance, a prominent example of this concept is OpenSea, the largest decentralized NFT marketplace.

Carbon Credits

Real-world asset tokenization can enhance the carbon credits market by increasing transparency, liquidity, and efficiency. Tokenizing carbon credits on a blockchain ensures immutable records and real-time traceability, preventing double-counting and fraud. This process reduces the need for intermediaries, cuts transaction costs, and speeds up settlement times with the use of smart contracts.

Additionally, tokenization allows fractional ownership, making carbon credits more accessible to smaller investors and enabling 24/7 trading on global digital platforms. For example, Verra issues verified carbon offsets and is exploring blockchain integration for enhanced transparency.

Supply Chain Management

Tokenizing assets on a blockchain enables real-time tracking of goods from origin to destination. This reduces fraud, errors, and delays by ensuring all parties have access to the same, verified information.

Furthermore, tokenization allows for the automation of supply chain processes through smart contracts. These contracts can trigger payments, reorder supplies, and update inventory automatically when predefined conditions are met. This reduces administrative overhead, speeds up operations, and improves coordination among suppliers, manufacturers, and retailers, leading to a more resilient and responsive supply chain.

A great example here is IBM Food Trust. It is a blockchain-based platform that tracks food across the supply chain, enhancing visibility and food safety.

Having learned the real-case products based on real-world assets and blockchain, our team was ready to implement the authentic RWA solution for one of our clients – Securitize.

How to Get Started with RWA Tokenization: 5 Key Stages

To come up with a powerful and competitive solution for RWA virtualization, understanding the core tokenization stages is of the essence. Dr. Xu, a Lecturer in Real Estate at The University of Manchester has identified five core stages to tokenize an asset, which play a critical role in digital tokens infrastructure development.

1. Identify a real-world asset

The first stage implies choosing the asset that will be represented in tokens. Basically, that covers any type of tangible or intangible RWAs that have value.

2. Establish the RWA ownership

Next, it’s important to verify the ownership of the selected asset, ensuring it is properly registered, licensed and compliant with the legal requirements and regulations. As a rule, this is handled by auditors, lawyers, notaries and other professionals with the relevant expertise.

3. Build a smart contract solution

At this stage, the dedicated development team builds a smart contract that defines and governs the RWA tokenization conditions. This covers the number of tokens, their value, as well as the rights and obligations of the token owners.

4. Issue the token

Once the smart contract is created, the RWA tokens are issued on a blockchain-powered network, where they can be purchased in exchange for stablecoins or fiat currency.

5. Manage and trade the token

Being issued on-chain, the rwa crypto tokens can be then traded and managed on secondary markets, such as decentralized exchanges, money markets and other financial services within the DeFi ecosystem.

No matter if it’s tokenized real-world assets, or fractionalized ownership on the assets available through tokenization, or even ownership rights on the physical assets represented in tokens – the RWA tokenization will be always represented by these essential stages.

Real World Assets and DeFi

The RWAs are tangible or intangible assets existing in the physical world with inherent value. On the other hand, DeFi represents a novel financial system built on blockchain technology, offering various financial services without traditional intermediaries like banks. DeFi’s relevance in the modern financial landscape lies in its ability to provide accessible, transparent, and inclusive financial services to anyone with an internet connection, regardless of their geographic location or socio-economic status.

Global asset tokenization and integration of tokenized RWAs into DeFi platforms involves representing ownership of these assets through digital tokens on a blockchain and allows for real world assets DeFi. These tokens can then be traded, lent, or used as collateral within DeFi protocols. For instance, a tokenized real estate property can be used as collateral for borrowing funds in a decentralized lending platform, or investors can provide liquidity to a decentralized exchange by staking tokenized commodities.

The inclusion of RWAs in DeFi systems offers several benefits:

Increased liquidity: Tokenization of RWAs unlocks previously illiquid assets, allowing for fractional ownership and facilitating trading on decentralized exchanges, thus enhancing liquidity.
Diversification: DeFi users gain access to a broader range of investment opportunities by incorporating tokenized RWAs into their portfolios, potentially reducing overall risk; also it fosters the market for creation of new rwa crypto projects;
Lower entry barriers: Fractional ownership of RWAs through tokenization reduces the minimum investment threshold, enabling more individuals to participate in traditionally exclusive asset classes.

What is the Future of RWA Tokenization?

Real-world asset tokenization opens up a wide range of cross-industry opportunities, converting nearly anything around us into digital forms.
Andrii Lazorenko, Co-Founder and CEO of IdeaSoft

No matter if it’s an artwork, real estate, oil supply contract or even the intellectual property – it can be stored, managed and validated through the protocols within blockchain network.

By creating a transparent and secure system to tokenize real-world assets, companies can expand their market presence to the global level, adopt the new technologies and enhance their funding. RWA tokenization makes direct investments accessible among larger audiences and enlarges the liquidity pool through a wide range of digitalized RWA tokens.

According to Binance’s July 2023 RWA market research, the tokenized asset market is estimated to reach $16 trillion by 2030, which is a significant increase from $310 billion as of 2022. Real estate, bonds, money, gold, art, collectibles and equities have the biggest perspectives for on-chain asset tokenization through blockchain and traditional asset fractionalization (usually represented by exchange-traded funds, real estate investment funds, etc).

Real-World Assets: State of the Market (July 2023 Research by Binance) — *Source: Real-World Assets: State of the Market [July 2023 Research by Binance]*

Finally, with RWA tokenization becoming more mature and widespread, governments and local authorities will adopt regulatory and legislation background for these digital projects. As a result, in the upcoming two to three years, we’re likely to witness a notable breakthrough in tokenization solutions for real-world assets.

Moreover, recent researches says that no matter which “state” of market we would experience, the tokenization of real world assets will gain potential. Thus, according to digital asset manager 21.co, the market potential for tokenized assets could range from $3.5 trillion in a “bear case” scenario to a staggering $10 trillion in a “bull case” scenario.

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RWAs Development Case Studies

Securitize is one of our best case studies showcasing one of our examples of real world asset crypto projects, tokenizing real world stocks and bonds with the help of blockchain technology.

Securitize provides a comprehensive technology solution for issuers of digital securities, facilitating compliant trading on public blockchains and multiple exchanges. Our platform, developed by the IdeaSoft team, incorporates key features such as investor onboarding, credit card processing, investor dashboard for lifecycle management, optional 2FA for investors, document signing, KYC/AML accreditation qualification, and fund and payout capabilities in both fiat and crypto currencies. We also offer support for multiple blockchains and provide an issuer admin console for seamless management.

tokenization of real world assetsasset tokenizationtokenize an assetrwa tokenization — *The preview of user’s investment options through Securitize platform*

One of our standout innovations is the Digital Securities Protocol (DS Protocol), which enables compliant trading of tokens on secondary marketplaces such as Alternative Trading Systems (ATS) in the U.S. and various other global securities exchanges and marketplaces.

Summary

Real-world asset tokenization is a powerful solution that can revolutionize the concept of asset ownership, making it more accessible, affordable and secure. Powered by blockchain, tokenized RWAs can enhance liquidity, enable fractional ownership, and create more opportunities for decentralized asset management and digital investments.

Now that you’ve learned the RWA tokenization essentials and its development specifications in crypto, it’s the right time to get into the game with a custom tokenization solution for real-world assets!

With over 250 successful products in our portfolio, IdeaSoft has accumulated years of cross-industry expertise and development experience in DeFi, NFT, blockchain and other tech areas. For each of our clients, we create a custom product development strategy that is tailored to the goals, requirements and needs of their company or enterprise.

Restaking can further enhance the benefits of tokenized assets, providing additional rewards and incentives for stakeholders. Do you need an expert quote on real-world asset tokenization or want to hire a dedicated team for DeFi development? Contact us to discuss how to enhance your business with the RWA tokenization solutions today!

Web2 vs. Web3: What’s the Best Technology for Your Business?

So far, we’ve witnessed huge progress in the evolution of web technologies, which currently evolved into three generations: Web 1.0, Web 2.0 and Web 3.0. And, while there’s a minor gap between the first and second gen, the difference between Web 2.0 and Web 3.0 is more notable.

In this post, our dedicated developers from IdeaSoft will shed light on Web 2.0 and Web 3.0 architecture, explaining the specifics, advantages and use cases of each. Additionally, we’ll explore what projects need the Web 3.0 migration and its potential benefits for SMBs and large enterprises.

Table of content:

Web 2.0: Key Features & Examples
Web 3.0: Main Principals & Use Cases
What’s the Difference Between Web 2.0 and Web 3.0 Architecture?
Pros & Cons of AI for Web 2.0 and Web 3.0 Apps
Web 2.0 vs. Web 3.0: Which Apps Should Migrate?
Products That Will Never Make It to Web 3.0
The Future Potential of Web 2.0 and Web 3.0
Summary

Web 2.0: Key Features & Examples

To help you study deeper the differences between Web 2.0 and Web 3.0 development, let’s make an in-depth overview of each technology. This will help you to get a better idea on which one will be a better match for your project and meets all your business objectives and needs.

With over two decades of presence, Web 2.0 has got a wide range of appliances and not without a reason. Some of the most notable features of this technology that are still relevant include:

Centralized architecture;
Transparency in data and integrations;
Application Programming Interfaces (APIs);
Web as a platform, not just a network;
Enhanced functionality and user interactions, more opportunities for collaboration;
Plenty of customization options;
Improved audience connection and marketing capabilities.

Such a large set of advantages of Web 2.0 has made it the top choice for millions of projects in social networking, content sharing and streaming, eCommerce and online marketplaces, financial and banking, eLearning and online education, cloud computing and so much more.

Today, Web 2.0 technology has been used by companies of different scales and niches. From progressive software for businesses like Microsoft or Adobe Creative Cloud to web-based user-oriented products like Zoom, Netflix, Twitter or Instagram – the Web 2.0 architecture has become a solid “backbone” of those all.

Web 3.0: Main Principals & Use Cases

Web 3.0, on the contrary, is known as a decentralized digital network solution, which is powered by blockchain. Though the technologies in Web 3.0 are almost identical to the previous gen, its architecture is built using the decentralized blockchain. Some other important features of this network include:

Blockchain;
Distributed Ledger Technology (DLT);
Smart сontract technology;
Tokenization;
Trustless and permission-less controls and environments;
Enhanced cross-chain interoperability;
Improved security and privacy;
Solid governance mechanisms.

The underlying concept of Web 3.0 is aimed to make internet searches more simple, efficient and in no time. The reduced reliance on centralized authorities results in improved trustability and transparency, which in combination with blockchain can uncover new possibilities for innovation, collaboration and growth.

Today, the Web 3.0 application is a popular tech solution for decentralized protocols and DEX platforms, metaverse solutions, AI and ML-powered apps, NFT marketplaces, decentralized social networks and so much more.

But does that mean that Web 3.0 is better than Web 2.0? Not quite. A majority of web experts expect Web 3.0 to develop along with the second generation, providing a wide range of decentralized optimizations for businesses.

What’s the Difference Between Web 2.0 and Web 3.0 Architecture?

As we mentioned, most Web 3.0 capabilities are already present in Web 3.0. So, should you actually choose Web 3.0 or Web 2.0?
Below we’ve reviewed the architecture and infrastructure of both to help you find the best option for your business needs.

So, as you compare the Web 2.0 to Web 3.0 specifications, you can explore the major differences in data ownership and management, user accessibility and authentication, technologies and its social focus.

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Pros & Cons of AI for Web 2.0 and Web 3.0 Apps

AI integrations is among the hottest topics of discussion in the tech world, and the network niche is not an exception. Recently, we’ve discussed the integration of AI and machine learning for mobile app development, and here we’ve analyzed the key gains and drawbacks of AI for Web 2.0 and Web 3.0 solutions.

What Are the Pros & Cons of AI for Web 2.0?

AI can bring numerous benefits to Web 2.0, which refers to the second generation of web-based services and applications that emphasize user-generated content, collaboration, and social networking. However, it also comes with its own set of challenges and drawbacks. Let’s explore the pros and cons of AI for Web 2.0.

Major Advantages:

Improved user experience through deep personalization, behavior analysis and data-driven recommendations;
Enhanced customer support and problem-solving;
Better data analysis and valuable business insights;
Greater automation and efficiency, especially for the repetitive tasks.

Possible Drawbacks:

Privacy concerns related to regulations compliance and security of the personal and sensitive data;
Trustability, which is mainly introduced by fake information or biased recommendations;
High dependency on the data;
User acquisition issues, as the audience might not be ready for the changes caused by the AI integration.

What Are the Pros & Cons of AI for Web 3.0?

The artificial intelligence solutions evolve extremely fast, and provide a huge potential for Web 3.0 solutions as well. When handled by a professional development crew, it can significantly power up your project, no matter if you decide to choose Web 2.0 or Web 3.0 technology.

Major Advantages:

Improved transparency and audibility provided by decentralized AI models and algorithms;
Retained data ownership and control, which gives the option to choose what data to share and with whom;
Facilitates trustless collaborations through smart contracts, allowing multiple parties to work together without relying on a central authority;
Complex processes and services automation delivered through AI-driven smart contracts.

Possible Drawbacks:

Scalability challenges may put some limitations on the product’s performance and responsiveness;
The transaction costs and gas fees can be higher for some processes;
The complexity of implementation, which requires professional development expertise and specialized knowledge of both AI and blockchain technologies;
Regulatory compliance challenges, based on which projects need to meet the additional legal requirements.

Web 2.0 vs. Web 3.0: Which Apps Should Migrate?

Along with the differences between Web 2.0 and Web 3.0, their advantages and disadvantages, it’s also good to analyze what projects can benefit from the Web 3.0 migration.

Below, we’ve introduced some of the key app segments which can get a great competitive advantage upon migrating their projects to Web 3.0.

Fintech apps. Incorporating Web 3.0 can significantly enhance the infrastructure and capacities of these applications, ensuring quick and robust transactions without constraints.
Cloud Storages. The decentralized, open-source and distrustless environment of Web 3.0 gives users complete control over their data. Additionally, the unique encryption mechanism enables to implement robust security, keeping the data protected from any unwanted access.
Gaming Apps. With Web 3.0, the blockchain-based mechanism allows to trade or exchange the in-game assets and gain a competitive advantage over the other gaming applications.

Besides, IdeaSoft experts see a great potential in GameFi niche, and we envision a huge growth in game dev projects development for the late 2023 – early 2024.

Besides, IdeaSoft experts see a great potential in GameFi niche, and we envision a huge growth in game dev projects development for the late 2023 – early 2024.
Viktor Legetsky, managing partner at IdeaSoft

Regardless of the specifications of your app, our experts always provide a detailed overview of your project to get data-driven opinions on whether or not it’s worth applying the Web 3.0 technology for your project.

Products That Will Never Make It to Web 3.0

While the Web 3.0 may appear a must-have technology for your business, it’s not always the best solution and mainly depends on each project.

For example, projects that require a high level of security, such as banking and medical applications will get more advantages from the Web 2.0 integration instead. Additionally, Web 3.0 won’t be that efficient for the products with a large user base, as their audience may not be ready to change their habits and switch to competitor alternatives instead.

Our specialists at IdeaSoft have also outlined some real-case examples where the Web 3.0 is not applied:

Not all businesses need fully decentralized products. For instance, financial and banking institutions, which may lack the direct access to their funds. Additionally, with the decentralized solution, users won’t be able to recover the access in case it’s lost, which hits both the system’s usability and trust.
Blockchain is not likely to make notable transformations for simple solutions. If the project features a simple architecture, or won’t get more efficiency upon the blockchain integration – then it’s better to make some upgrades to the existing Web 2.0 ecosystem. A professional project audit and market analysis will help you to evaluate the benefits of Web 2.0 and Web 3.0 architecture and come up with the right decision for your business.
Web 3.0 is less preferable for projects that imply rapid development. In this case, Web 2.0 provides much faster time-to-market compared to Web 3.0 alternative.

The personalized approach of IdeaSoft company helps our clients to get the most efficient and effective solution that is fully tailored to your company’s goals and needs. During consultation and research phases, our developers always make a comprehensive analysis of the existing tech solutions within Web 3.0 and Web 2.0 niches to help your business take the most of their integration.

The Future Potential of Web 2.0 and Web 3.0

Despite the emerging popularity of Web 3.0, it’s not likely to completely replace the second generation during the next decade. According to the most recent market research, these technologies are likely to develop in parallel and operate within different user segments.

Based on our extensive experience at IdeaSoft, we’ll say there’s no clear answer on the best “one-size-fits-all” network solution. However, having explored the comparison between Web 2.0 and Web 3.0, it becomes much easier to see which one will be a better fit in terms of your project specifications.

It’s recommended to consider Web 3.0 if your project:

Has the decentralized system architecture
Requires enhanced security and trustability
Operates with large volumes of sensitive data
Enables users to retain data ownership and management

On the contrary, Web 2.0 technologies can fit better for the projects that:

Are based on a centralized architecture
Feature greater accessibility and are community-focused
Provide efficient rapid development options
Are highly scalable and easy-to-maintain

At IdeaSoft, our experts always make a deep analysis of the client projects to come up with the most efficient and effective network development solution. We carefully study the business model, key objectives and client needs, yet conduct comprehensive market research to identify the right tech stack and dev expertise for each case.

Summary

The final decision on which technology – Web 2.0 or Web 3.0 – will be better for your project depends on many factors, such as the project’s architecture and functionality specifications. While Web 2.0 is a common solution for a majority of businesses, Web 3.0 can offer greater room for upgrades and innovations.

At IdeaSoft, our team of dedicated web developers features extensive expertise across both Web 2.0 and Web 3.0 technologies, helping clients to come up with the most efficient decisions for their business.

Consider launching a Web 2.0 or Web 3.0 solution from scratch or upgrade your existing product? Contact us and get professional assistance for any web development project today!

Outsourcing vs. Outstaffing: Which Software Development Model Suits Your Business?

The hiring niche in software outsourcing and outstaffing evolves, introducing multiple models and progressive solutions to the market. If you’ve landed on that page, you are surely aware of the two most popular – IT outsourcing and outstaffing services, which already helped thousands of companies to fill the gaps with the right expertise and tech stack.

Though both models offer distinct benefits for startups and prospective ventures, understanding their differences will help you maximize the developers hiring process and get the highest profits for your business. However, businesses should also be prepared to navigate IT outstaffing challenges, such as managing remote teams, ensuring smooth communication, and maintaining project alignment.

In this article, we’ll review the specifics of software outsourcing and outstaffing and explore the pros and cons of each to help you come up with the right solution for your project or business needs.

Let’s dive in!

Table of Contents:

Key Differences Between Outsourcing and Outstaffing Models
Pros and Cons of the Outsourcing Model
Pros and Cons of the Outstaffing Model
IT Outstaffing Services vs Team Outsource
How to Find Developers for the Software Development Outsource or Outstaff?
Summary

Key Differences Between Outsourcing and Outstaffing Models

Despite both models helping to enhance software development with the right hiring expertise, the difference between each starts right from their meaning. So, let’s first analyze the outstaffing vs outsourcing definition in the context of hiring software developers.

What Is Outsourcing?

In IT and software web development, outsourcing is a common business practice of hiring an expertise party outside a company to perform services or build products that are fully tailored to the business goals and needs.

Being first recognized as a business strategy in the early 1990s, it became a powerful solution to optimize workflow and development costs without sacrificing the quality of the end products. Today, the outsourcing model has been known as a proven way to focus on the company’s core competencies and business goals while entrusting complex and expertise-specific processes to external development vendors.

What Is Outstaffing?

Outstaffing model, also known as staff augmentation, has a slightly different approach to developers’ hiring. Unlike outsourcing, where the entire project is delegated to an external company, it implies involving remote developers with particular expertise to work together with an in-house team.

According to the IT outstaffing services, businesses can retain control and oversight of the development process while augmenting their team with additional resources, skills, or tech stack needed.

Whether you’ve decided to outstaff or outsource software development, understanding the major benefits and potential drawbacks is of the essence. So, let’s review the pros and cons of team outstaff vs outsource to identify which will work best for your business objectives.

Pros and Cons of the Outsourcing Model for Business

To better understand whether outsourcing an IT company for your project is worth it, we’ve covered this solution’s essential benefits and possible drawbacks.

benefits of outsource, outsourcing and outstaffing, outsource development, pros and cons of outsourcing, outsource model, IT outsourcing — *Advantages and disadvantages of outsourcing development services, source: IdeaSoft tech expertise*

Pros and Cons of the Outstaffing Model for Business

In case you need to boost your in-house team with niche-specific expertise (such as, for instance, fintech software developers or blockchain specialists), there’s no need to invest in the outsourcing solution. Instead, you can hire the right talent from a fintech software development company!

Below we’ve outlined the key points to consider before you hire software developers through the outstaffing solution.

advantages of outstaffing, disadvantages of outstaffing, outstaffing, hire remote developers, in-house development team to hire, pros and cons of outstaffing — *Advantages and disadvantages of outstaffing development services, source: IdeaSoft tech expertise*

IT Outstaffing vs Outsource: What to Choose for Your Project?

With years of experience providing team outstaff and outsourcing services, IdeaSoft considers these models being extremely effective and profitable for the software development niche. Software development outsourcing companies offer the ultimate solutions and technologies to address specific business objectives and their needs. At the same time, these solutions can help businesses to improve cost-efficiency, speed up the development time and maximize the output of their projects.

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Based on our extensive experience, the outsourcing model will be the right option for enterprises, ventures, and startups which need the following:

Expert assistance in a particular technology or niche-specific project. If you are considering launching a project in highly specific industries, such as blockchain, or fintech, hiring qualified experts is of the essence. Such professionals will provide you with the latest solutions and ultimate decisions that will make your product effective, valuable, and highly competitive within the target market segment;
Launching the startup or business project from scratch. A professional outsourcing and outstaffing company, such as IdeaSoft, can offer a custom development solution based on the idea or concept provided. Additionally, such vendors offer full-cycle development services to handle every stage at the top level, which means access to all the specialists you need;
Shifting the focus from technical aspects to marketing efforts and product release. With team outsourcing, businesses can invest major efforts into the promotion and marketing aspects, staying sure the product development will be handled at the top level;
The turnkey development services for their custom solutions. Opting for high-end outsourcing services makes it possible to launch a powerful product with only a project idea or concept. At IdeaSoft, we provide first-class consulting and support across all the stages of software development to help you build a powerful product that is fully tailored to your business goals and needs;
A cost-efficient alternative to local development services. There’s common evidence that the average hourly rates for software developers in the CEE region are lower compared to Western Europe and North America countries. In addition, according to the latest gathered data, this trend will continue in 2023 and the upcoming 2024.

developer rate, blockchain developer rates, senior developer rate by country, hourly dev rates by country, hire developer, developer payment per hour — *Developers’ hourly payments data distinguished by region, source Toptal and SalaryExpert*

On the contrary, a team outstaff solution will be a better fit for the businesses which:

Have already set up their business within a particular niche and looking for scaleup opportunities for further development and growth;
Need a temporary talent gap solution to perform particular expertise-specific processes in-house (for instance, fintech software development services or blockchain development solutions);
Want to dive into the custom solution development fully and need on-demand assistance for their complex solution to maximize the final output. Based on our experience, this works exceptionally great for large and complex projects;
Consider upgrading the existing product to enter the new markets, but experience a lack of tech expertise within that niche. This is a common practice among fintech projects that extensively embed blockchain solutions.

Have a project idea already?

Reach out today and our team will correctly draw up the requirements for your project

How to Find Developers for software outsourcing and outstaffing?

As technologies move forward by leaps and bounds, every organization wants to involve the top talents in their development projects. No matter if you’re planning to hire blockchain developers or need an experienced smart contract developer for hire, here are some proven tips that can help you to find the best developers for your business:

Define your requirements: Identify the skills, experience, and expertise you need for the custom development project.
Research the potential outsourcing/outstaffing vendors: Explore reputable outstaffing companies to find a pool of skilled developers.
Check companies’ portfolios and reviews: Review the portfolios and feedback of potential vendors to assess their previous experience and expertise within the niche-related projects.
Request for a consultation on your idea: Before you start the cooperation, discuss the project specifications, business goals, and needs. Additionally, evaluate the developers’ technical abilities, cultural fit, and workflow nuances (location, time zone, communication approaches) to ensure effective collaboration and excellent output.
Consider ongoing support and maintenance: Discuss and clarify the availability of post-development support and maintenance services.
Review legal and contractual aspects: Ensure you have a clear and comprehensive contract that covers aspects like intellectual property rights, confidentiality, and project milestones.

For the further research, read our article about all you need to know while outsourcing to Ukraine to dive deep into all the details. Now that you’ve uncovered the basics of team outstaffing and outsourcing, and can finally make an informative decision on what services to choose for your business or project.

Summary

As the technologies are moving forward by leaps and bounds, every organization wants to involve the top talents in their development projects, and that’s where outsourcing and outstaffing services can become a great fit.

At IdeaSoft, we offer top-notch expertise across various niches, from the trendy like eCommerce and B2B solutions to, more specifically – fintech, blockchain, and crypto, the latest of which you can always find in our portfolio. So, whether you’re looking for a professional outstaffing company or want to entrust the full project delivery to the software developers for hire – we’ll get you covered!

Already have a project to discuss? Contact us today to get an expert comment on your custom development solution and immediately enhance your business!

Blockchain

Software

IT Consulting

Design

Blockchain

Software

IT Consulting

Design

How Can We Help?

Introduction to ReFi: What Is Regenerative Finance?

Conceptual Framework of Regenerative Finance (ReFi)

Technological Underpinnings of Regenerative Finance (ReFi)

How is ReFi Different From DeFi?

ReFi Case Study: Toucan Protocol

Element 1: Toucan Carbon Bridge

Element 2: Toucan Carbon Token (TCO2)

Element 3: Toucan Carbon Pool

Future Applications of Regenerative Finance (ReFi)

Summary

Conceptual Understanding of DePIN

How does DePIN work?

Physical Resource Networks vs. Digital Resource Networks

How DePINs Transform Web3

Examples of DePIN Projects

Filecoin & Arweave – The Leaders in Decentralized Storage

Helium – Leading the Way in Decentralized Wireless Networking

Render Network – The Rising Star of Decentralized Computing

Theta Network – The Innovator of Decentralized Streaming Media

Future DePIN Applications

Summary

Table of contents:

Outsource your software product development

Choose Agile software development approaches

Develop only essential features

Hire a complete development team

Involve QA specialist in the development process

Work with expert developers

Additional ways to reduce the cost of software development

Don’t prefer price over quality

Understanding the Evolution of the Web 2.5

Web 2.5: The Intermediate Stage

Contrasting Web 2.5 with Web 2

What makes Web 2.5 different from Web 3

Practical Implications of Web 2.5

Blockchain Integration

Tokenization

Fintech

Key Web 2.5 Insights for Product Owners

Skill Development

User Experience

Constant Tech Stack Enhancement

Building and Using Web 2.5 Applications

Financial Institutions

Supply Chain

Tech Giants

NFT Marketplaces

Summary

Security Tokens Market Overview & Its Future Perspectives

Why Do Security Tokens Matter?

Limitations & Benefits of Security Tokens

What Are the Benefits of Security Tokens?

The Key Advantages of Security Tokens

Potential Limitations of Digital Security Tokens

Our Expertise: Securitize Project

How to Issue a Security Token with Securitize?

Summary

Digital Tokens: Market Outlook & Benefits

Security Tokens: Definition & Specifications

Utility Tokens: Meaning & Specifications

Utility vs. Security Token Comparison: A Quick Overview

What’s Common Between Security and Utility Tokens?

The Key Differences Between Utility and Security Tokens

Security Tokens

Main Advantages of Security Tokens:

Potential Drawbacks of Security Tokens:

Utility Tokens

Main Advantages of Utility Tokens:

Potential Drawbacks of Utility Tokens:

Which Token Type Is Better for Your Blockchain Project?

Summary