How to Create a DeFi Aggregator Platform

DeFi aggregators are one of the most recent groundbreaking developments in decentralized finance. According to statistics, more and more users are using aggregators for trading. Having experience in developing similar software products, we decided to share with you tips on how to create a DeFi aggregator.

What is a DeFi aggregator?

DeFi aggregators are one of the most promising types of DeFi projects. According to Messari, approximately 20% of total trading on non-custodial Ethereum exchanges is done using DeFi aggregators. And data from Dune Analytics shows that the number of new aggregator users, daily transactions, and volumes has increased dramatically since the beginning of the year. So, what are DeFi aggregators, and why are they so popular? Let’s figure it out!

Decentralized finance is an ecosystem of various financial instruments based on public blockchains. Unlike centralized finance, DeFi provides more privacy to users while remaining accessible to anyone. Due to openness and transparency, DeFi applications can easily integrate and interact with each other. However, in practice, it turns out that these applications are fragmented and it is quite difficult for users to keep an eye on the DeFi market. That’s when DeFi aggregators came into play.

A DeFi aggregator is a platform that gathers information from various DeFi protocols and integrates them into a single interface, allowing traders to make smarter decisions. Besides, aggregators perform other functions such as connecting liquidity pools, reducing transaction costs, depositing funds into DeFi pools, and more. Users can find an aggregator that suits their needs and get more value from interacting with DeFi.

Here are some examples of DeFi aggregators on the market.

1inch and DEX.ag enable users to exchange crypto assets at the most favorable rate.
InstaDApp allows users to receive loans in DAI, without verification of identity, age, or credit history.
PlasmaFinance aggregates using decentralized oracle data across major protocols in the sector, allowing users to interact directly with these protocols from a single interface and transfer liquidity between different pools.

You can find many other DeFi aggregators as their number is constantly growing.

Benefits of DeFi aggregators

If you want to know how to create a DeFi aggregator, first you need to study all the benefits of these platforms in order to implement them in your project. DeFi aggregators are useful for both DeFi users and DeFi companies. They regulate user interactions with exchanges, decentralized applications, investment platforms, etc. Aggregators combine multiple protocols into an easily manageable single interface, dramatically improving the user experience. Now users don’t need to open multiple tabs to monitor data from different apps. They are all accessible from a single aggregator interface. This makes it easier for users to choose the most profitable options on the market, minimizing gas fees.

Also, users of decentralized exchanges often face problems due to high slippage when orders are executed at a price that is less favorable than expected. Aggregators help solve this issue. For example, PlasmaFinance aggregates data from different protocols and allows users to see available prices in real-time and swap the best DEXs. 1inch went even further by aggregating liquidity from different DEXs so that whenever a trader swaps, the protocol generates the best cryptocurrency prices from all DEXs to which it’s connected automatically.

Aggregators also help services to find their customers. This is one of the best ways to introduce a new project and increase its liquidity. Basically, aggregators take advantage of one of the main DeFi benefits – interoperability to create a single, competitive marketplace accessible to a wide range of users. Therefore, when developing a DeFi aggregator, you should lay in your product opportunities for both traders and companies.

DeFi aggregator development process

DeFi aggregators work on the basis of smart contracts, like other DeFi products. Smart contracts are a great way to regulate the relationship between users and platforms in an automated way. However, I think you know that they can be vulnerable if created without considering the best security practices. Therefore, first of all, to build your DeFi aggregator, you need to enlist the support of an experienced blockchain development team that knows all the features of working with smart contracts.

Platform security is critical to building trust with your future users. Over the past year, we have heard the news from everywhere about hacker attacks on DeFi services, most of which became possible due to errors in smart contracts. Never neglect security if you want to launch a successful DeFi project.

DeFi aggregator development process consists of several stages:

Discovery phase

This step is necessary for a detailed study of the goals and requirements of the project in order to create a product that meets the needs and expectations of end-users. During the discovery phase, a customer and a development team together determine the scope of work, budget, and deadlines, developing a detailed plan for how to create a DeFi aggregator. We advise you not to skip this step, as the discovery phase helps to optimize costs and reduce project risks.

UX/UI part

DeFi aggregators emerged with the motto of improving user experience by providing a single interface for working with different protocols. However, it is not enough to integrate several protocols into one product to live up to this statement. You really need to create an interface that makes it easier for users to interact with DeFi and unleash all the benefits of an aggregator. So there is no point to lay down functionality that in fact turns out to be complicated and confusing. This is where you need an experienced UX/UI design team to help you implement features into a user-friendly interface that your users will love.

Sergej Kunz, a co-founder of one of the most popular DEX aggregators 1inch, admitted in an interview with TheDefiant that he considers UX to be a weak part of his product that needs improvement, and one of the reasons why users prefer centralized exchanges. So, learn from other people’s experiences and take care of the UX/UI design of your aggregator at the stage of its development. This will save you money in the future.

Smart contracts protocol development

In DeFi applications, most of the back-end part is embedded in smart contracts. We have already talked about how important it is to choose an experienced development team to create reliable smart contracts. At this stage, developers will create and launch all the necessary algorithms for the operation of your platform, as well as implement the necessary integrations with other DeFi protocols.

You need to put in your protocol a certain logic of work that allows you to achieve the goals of the project. For example, 1inch has a unique algorithm that allows users to exchange crypto assets at the most favorable rate. This is possible thanks to splitting orders and the selection of the best rates on different DEX platforms. Also, you should think about the necessary features for monetizing your aggregator. Usually, DeFi aggregators earn commissions from users or partners. Develop your own strategy that organically fits into the functionality of the product.

Front-end development

Front-end is also a very important part of the DeFi aggregator development process, as this is the part that users interact with directly. Front-end developers not only make sure that all interface elements are correctly positioned, but also fulfill their functions, helping users to effectively interact with the platform. Choosing the right frameworks and libraries helps to create powerful and reliable applications.

Testing

Testing is crucial for the DeFi product development. Tests allow you to make sure that all platform features work as intended and also help you identify and prevent system vulnerabilities. When it comes to smart contracts, you simply cannot ignore testing and audits. According to The Block Research, in 2020 there were 15 hacks of DeFi platforms amounting to $120 million funds being stolen. Timely testing and bug fixes reduce future risks of attacks.

Once you are sure that your DeFi aggregator is ready to launch, you should start collecting feedback, introducing new features, and improving the system to remain competitive in the market. Working with an experienced development team, you will go through all the steps of developing a DeFi aggregator easily and get a reliable and secure software product.

Must-have DeFi aggregator features

When looking for an answer to the question of how to create a DeFi aggregator, you cannot ignore the selection of features for your platform. Having studied the functionality of the most popular DeFi aggregators, we have compiled a list of core features that you should think about first.

Sign up. To get started with a DeFi aggregator, a user usually needs to connect his wallet, which he uses for storing and transferring crypto assets. You need to create a list of wallets that your platform should support and implement this integration.

Dashboard. The main task of any DeFi aggregator is to connect different protocols in a seamless interface. Therefore, a dashboard is one of the main features that will be helpful to your users. For example, Zapper aggregator is well known for its dashboard, which allows users to instantly assess the value of their portfolios. Zapper categorizes assets into various categories such as wallet, income positions, liquidity provision, and borrowing. This allows you to structure information and navigate faster. Think about how you want to present data to your users.

Exchange tab. An exchange tab is a feature that allows users to quickly and with the greatest benefit exchange one crypto asset for another. The exchange aggregates liquidity from integrated DeFi protocols and provides the user with the best options. We have already mentioned the 1inch split algorithms for achieving the best exchange rate. Zapper has a different algorithm. It aggregates the most liquid Uniswap and Balancer markets and presents users with the best deal. Zapper also allows you to specify gas and slippage tolerance settings when creating an order. The built-in exchange is one of the main tools of the DeFi aggregator, allowing users to make profitable transactions in a few clicks.
Liquidity pools. A liquidity pool is a collection of funds (tokens) placed in a smart contract by so-called liquidity providers. The reserves are pooled between a network of liquidity providers who supply the system with tokens and get rewarded. Different platforms provide different rates and commissions, as well as various bonus systems that attract capital to their platform. You should provide users with all the information they need about your liquidity pools.
History and analytics. The effectiveness of trading operations largely depends on analytics. Give users the ability to track their transaction history and performance right in your application. For example, Zerion uses information from the most popular tool for most DeFi investors, EtherScan. The aggregator displays all data on a single page of transaction history in a graphical view, which eliminates the need for users to open additional tabs. And Zapper provides users with additional features to make it easier to work with data. This way you can easily find the desired transactions using filters or download the transaction history in CSV.

Farming. After the launch of such projects as Yearn, Sushiswap, and Yam Finance in the summer of 2020, the term Yield Farming gained popularity, and aggregators are actively using this crypto trend. Yield Farming is expected to generate income from the placement of cryptocurrencies on various DeFi-platforms for crypto-lending. In this way, DeFi aggregators create favorable conditions for attracting capital to their platforms.

Other features

In addition to the basic features, many DeFi aggregators have additional functionality that improves the quality of the user experience. Also, such features allow you to differentiate yourself from competitors and take an advantageous place in the market. The main task of any DeFi aggregator is to make it easier for users to interact with various DeFi protocols, so you should continue to work on the convenience and functionality of the platform constantly.

Here is a list of some interesting features that existing platforms offer:

Zapper invites users to try a demo without having to connect a wallet. This allows potential users to evaluate the functionality and usability of the platform before starting to fully work with it.
Zerion provides users with a wide range of tools to customize the interface. So users can choose a theme and language. 1inch also allows platform users to customize their token portfolio and wallet token lists. Think about how you can give users more freedom to interact with the interface of your DeFi aggregator.
DeFi Saver has a Recipe Creator feature that allows you to combine any number of actions from different DeFi protocols into one transaction. The platform also has many automation features that optimize operations.

Also, we advise you to consider the availability of your DeFi aggregator on mobile platforms. According to statistics, most users prefer to interact with applications using a smartphone. By having a mobile app you increase the potential reach and engagement of users who can track their portfolio any time they want right from their phones.

IdeaSoft experience

Now that you know how to create a DeFi aggregator, you know what expertise it takes. Let us tell you how IdeaSoft can help you develop such a DeFi platform.

IdeaSoft has been creating custom software solutions for innovative businesses around the world for over 5 years. We work with both startups and enterprises, offering solutions that best fit the requirements of each specific project. Most of the projects from the IdeaSoft portfolio are related to blockchain technology. Our team has been involved in building crypto exchange platforms, issuance platforms, NFT marketplaces, non-custodial wallets, DeFi aggregators, and more.

Our client list includes Biteeu, a fully licensed and compliant cryptocurrency exchange for the European Union; Bochica, the first Colombian blockchain; Securutize, an issuance platform that entered the list of Blockchain 50 Most Promising Companies within the Blockchain Ecosystem by CB Insights in 2020. Feel free to check out our portfolio to find out more about these projects.

If you are looking for assistance in setting up a DeFi aggregator feel free to contact us to discuss your project. We will be happy to help you!

How to Hire Remote Blockchain Developers

When you’re starting a blockchain project and you’re not a developer yourself, the process of hiring tech specialists can be a really challenging task. Blockchain is a relatively new technology and you need to find experienced developers to implement your idea in the best way. In this article, we’ll tell you how to hire remote blockchain developers in 2021, where to find experienced specialists, and what is better: outstaffing or outsourcing. Let’s get started.

Required blockchain developer skills

Requirements for blockchain developers — Source: Jumar

So what knowledge and skills should your ideal blockchain developer have? Of course, a lot depends on the type of project. Working, for example, with DeFi projects is a serious and long-term task. In this case, blockchain developers must be disciplined, able to cope with tight deadlines and stressful conditions, and have high development skills.

Blockchain developers fall into 3 main categories:

Blockchain engineers. These are the people who create the software shells and implement complex algorithms. They are the ones at the “cutting edge” of development. These are the most experienced people in the blockchain sphere. Blockchain engineers need proven experience with C and Java languages, an understanding of the software and hardware architecture on the global level, and a good knowledge of the applications` server side.
Blockchain programmers. These are creators of client products and web interfaces that use blockchain technology. There is a big variation of requirements here – it can be knowledge of basic web development languages, such as Javascript, Python, Ruby, and more exotic, such as Go, Rust. Also, they need experience with Node.js or MongoDB.
Smart contract developers. This group of specialists is directly involved in drafting and maintaining smart contracts, as well as solving applied problems that arise during the operation of a blockchain service. This is where Javascript and Python skills, as well as full-stack web development experience, come to the fore. Smart contract developers need to know popular programming languages, libraries, and frameworks.

Also, despite the programmer’s specialization, he or she must be at least familiar with Solidity, the programming language for smart contracts on the Ethereum platform. Most blockchain-based solutions operate on smart contracts, which allow you to automate processes and exclude third parties. So if your project is related to the Ethereum network, Solidity will be one of the must-have requirements.

Speaking about programming languages, it should be noted that C and C++ are important for blockchain developers precisely because the lion’s share of projects are written in them. A smaller part of blockchain projects is written in Java, although theoretically, as programmers say, it is possible to build chains of transaction blocks in any language.

Blockchain is a combination of familiar, long-existing technologies (e.g. hashing). Together, they provide new features that open up huge prospects for blockchain-based products. In this regard, experience with distributed databases, knowledge of modern cryptography, especially asymmetric cryptography, encryption, and hashing are useful.

The level of requirements for blockchain developers is generally high. A huge number of software specialists are not yet working with blockchain technology, but are interested in it. So, where to find remote blockchain developers?

Where to look for blockchain developers

Really good professionals in blockchain development can now choose from several dozen or even hundreds of offers. The market of blockchain projects is constantly increasing, as well as the amount of investment in it, so blockchain developers today are in short supply. If you want to hire the best remote blockchain engineers you should know where to look for them.

In addition to Google, there are several ways to find blockchain developers. One of them is business directories, where companies create their profiles, tell about their services, and publish customer reviews. The second one is freelance sites, where you can find both company representatives and independent developers. It is should be noted, that a blockchain development company gives more guarantees and control over the quality of services, so we recommend working with a company rather than with freelancers.

Business directories

You can find many different directories with software development company profiles. Most companies represented in such directories have been on the market for a very long time, so it is quite easy to find an experienced partner to develop a blockchain project. The list of the most popular business directories include:

Clutch. It helps business owners to find reliable blockchain development companies and entrust particular tasks to them. This service has more than 200,000 agencies in more than 500 categories. Clutch helps business owners to be confident in the quality of the services provided by blockchain development companies.

GoodFirms. It is the right place to start searching for blockchain specialists after Clutch. GoodFirms has information about more than 60,000 software companies and more than 30 000 reviews about them. It offers visitors comprehensive, detailed, and free research of outsourcing companies.

Techreviwer. It helps companies of all types to choose professional development partners from more than 20,000 offers. Techreviwer is one of the most popular sites for searching for dedicated software development teams.

Freelance sites

Freelance sites are in high demand among small businesses that don`t need big development teams. Most specialists on freelance sites have been on the market for a very long time, so it is easy to find an experienced freelance developer by examining reviews and completed projects. If you decide to hire remote blockchain developers on a freelance basis, you should consider the following resources:

Toptal. This site helps different businesses find the right developers. It offers a risk-free trial version and only sends a bill if the project tasks are completed successfully.

Freelancer. There are a lot of blockchain developers that are looking for projects. It is a very popular website where potential employers hire remote blockchain developers.

Upwork. Upwork helps startups find the right specialists to meet their business needs. It is among the most efficient freelance sites in terms of being an intermediary between a client and a remote developer.

Ukraine is one of the best countries to hire remote developers

Why hire blockchain developers in Ukraine

When looking for remote developers for your project, pay attention to Ukraine. This is a country with reasonable prices and high quality of blockchain development. Ukrainian software companies show great expertise in big data and AI, DeFi development, blockchain, and cryptocurrency projects. The reasons to hire remote blockchain developers in Ukraine include a strong work ethic, convenient time zone, European mentality, attractive rates, strong skillset.

According to Upwork statistics, Ukraine ranks first in Europe and fourth worldwide in the number of freelance programmers. More than 82% of orders carried out by Ukrainian specialists are related to software development. The majority of orders come from English-speaking countries such as the USA, UK, Australia, and Canada.

The pool of IT specialists in Ukraine is huge. At the moment there are more than 1,000 IT companies that provide outsourcing services. Every year the IT market of Ukraine grows by 20%, according to statistics. So if you looking for a remote blockchain development team, Ukraine can be one of the greatest options.

Outstaffing or outsourcing: what to choose

Now let’s talk about two of the most common models of collaboration with remote blockchain development teams. Outstaffing or outsourcing: what to choose?

Outsourcing means that a customer entrusts a development team with the creation of a software product and expects a certain result. Having provided a list of requirements, the client can track the progress of the development, but he himself is not involved in the process and can focus on other business tasks.

Criterion	Outsourcing	Outstaffing
Type of projects	Small or one-time projects	Large or continuous projects
Who is responsible for code quality	Vendor	Client
Client control over development	Little management effort	Full control
Project start	Takes time to collect requirements and build a team	Quick start
Budget	More expensive than outstaffing, cheaper than in-house	Flexible with the costs

Outsourcing vs Outstaffing

For example, you conclude a contract with an outsourcing company for crypto exchange development, and it is important to you get your project ready in time and of high quality. The outsourcing company evaluates the situation and decides how best to implement your idea. Your crypto exchange will be ready in time and you don’t need to figure out all the technical details. This option is suitable for you if you want to completely entrust the development of your project to other specialists.

Outstaffing, on the other hand, means that the client is given certain personnel for an agreed time. The client himself determines how to organize the work of the developers, as well as the whole development process. If you are looking to expand your development team and just need individual specialists to do this, outstaffing is the perfect option for you. In this case, you lead the development process.

How IdeaSoft can help you

IdeaSoft is a software development company that offers both outsourcing and outstaffing services. Our in-house development team consists of more than 120 developers. We can provide you with a full cycle of software product development: from business analysis, design to programming, testing, and support. Thus, you can completely entrust us with the development of your blockchain project. If you are looking to hire remote blockchain developers to expand your team, we can offer you the services of experienced developers of different seniority levels and technology stack.

Why innovative companies choose IdeaSoft:

Huge experience. IdeaSoft has gained a reputation as a reliable and proven outsourcing development partner for innovative companies all over the world.
Wide range of services. We can quickly assemble a team of software development specialists for you that meets the requirements of your project, including designers, developers, QAs, business analysts, DevOps, and others.
High-quality blockchain development. We are proud to have a lot of positive feedback from our clients. The expertise of IdeaSoft developers has been proved by more than 250 successfully implemented projects.

The IdeaSoft blockchain development team will be happy to help you with your project. If you are looking for developers, take a look at what we do, and feel free to contact us.

A Complete Guide on Initial DEX Offering (IDO) Development

The crypto market continues developing and increasing. The upside potential and risk reduction in the crypto industry have attracted more attention from investors. There are several strategies and mechanisms for offering tokens to involve more investors.

The latest iteration of token offering mechanisms is the Initial DEX Offerings conducted on decentralized exchanges. Restaking has emerged as a key trend in the space, providing additional rewards and incentives for token holders. So, in this article, we will talk about the IDO mechanism as well as the Initial DEX Offering development.

What is an Initial DEX offering (IDO)?

2020 was a phenomenally successful year for decentralized finance as the TVL (total value locked) in DeFi went from less than $1 billion in January to more than $16 billion in December 2020, according to Coindesk. And the current success of DeFi brings IDO to the fore.

Initial DEX offering or IDO is a fundraising method in which the IDO coin is issued via a decentralized liquidity exchange that relies on liquidity pools by which traders can swap tokens. The liquidity pool is pair of crypto assets and stable coins. For instance, USDT/ETH is a liquidity pair. Traders can swap between crypto-assets and stable coins based on market conditions. As the volatility of stablecoins is inappreciable, it offers a safe way for traders to manage crypto tokens and assets by swapping them with each other.

Any member of the community can choose IDO as a method for distributing tokens, and such tokens can represent any type of asset hosted on decentralized exchange. IDO is attractive to exchange users with a more economical token sale model. For example, the available liquidity pools on DEX enable IDO to provide quick liquidity with minimal slippage. Examples of DEXs offering IDO services include Binance DEX, Polkastarter, and Uniswap.

Differences between IDO, IEO, and ICO

While in equity markets, IPO (Initial Public Offering) is the standard way to raise capital, things on the crypto market are more fluid. We had Initial Coin Offering (ICO) in 2017- 2018, Initial Exchange Offerings (IEO) in 2019, and Initial DEX offering (IDO) in 2020. So we can call it the evolution of the crypto market. The following chart compares the different characteristics of the ICO, IDO, and IEO models.

Characteristics	IEO	ICO	IDO
Fundraising	Crowdfunding by issuing selling via a centralized cryptocurrency exchange (CEX)	Crowdfunding by issuing utility token/coin through blockchain platforms	Crowdfunding by issuing selling via a decentralized cryptocurrency exchange (DEX)
Marketing& Advertising	CEX responsible for all the marketing and advertising	Project teams take care of all the advertising and marketing	The team behind the project and DEX do the marketing and advertising
Trading& Liquidity	Immediate liquidity and trading on the CEX. Exchange with a limited number of tokens traded on this exchange	The issuer is responsible for the transferring token. Immediate liquidity after launching in CEX	Immediate liquidity and trading on any DEX. Providing an exchange with an unlimited token stack
Trust	Investors who register with the CEX for the token sale have to go through KYC/AML	There are trust issues due to some token issuers providing misleading information	There are trust issues due to no KYC integration and no control mechanism
Security	Highly secure since a centralized exchange host does all transactions. High risk of identity and banking information theft.	Highly insecure as transactions happen on ICO project platform which could lack proper security measures	No risk of identity and information theft. Anonymous and highly secure transaction.
Fees	Exchanges charge issuers commission for launching and trading	There is no fee due to no intermediaries. Exchange fee after launching in CEX	No exchange fee. Only payment gas for the provision of smart contracts
Regulation	Regulated by CEX	Partially regulated (depends on the region)	Unregulated

The benefits of the IDO model

In this section we will review the most common machanics used by initial DEX offering platforms.

Open and fair fundraising

Fundraisers using the IDO model often don’t have to rely on traditional private investments to kickstart their operations. The token sale goes public and investors buy many tokens at a lower price. They will resell these tokens to the general public gaining a considerable profit. Also, anybody can organize or participate in IDO, not just private investors, because there is no need for CEX and permission to start fundraising.

Immediate liquidity

With IDO, project tokens acquire immediate liquidity. The liquidity pool promises liquidity at every price level with no slippage. Many altcoins are only accessible through DEX, where transactions can occur without high trading volumes. IDO provides more opportunities for the distribution of project tokens and increases financial inclusion.

Instant trading

From the date a project launches its token, investors can start trading. Therefore, traders try to buy a new token as early as possible and later sell it at a higher price during the IDO. For example, in UMA protocol fundraising, the initial token price of $0.26 immediately jumped to around $2.

Lower costs

DEX functions on the basis of self-executing smart contracts. If a project uses DEX solutions without an intermediary, they only pay the “gas” fee for deploying a new smart contract that controls the liquidity pool and the asset’s token. And even so, DEX charges a low fee, around 0.3%, for exchanges like Uniswap.

Reliable transactions

Through smart contracts, DEX executes trades and records them to the blockchain, enabling reliable transactions. And since DEX doesn’t hold your funds, they are less likely to be targeted by hackers.

How to launch an IDO?

Now let’s talk about Initial DEX Offering development. So this is how it works. Projects appeal to the general public through launchpad or platforms specializing in IDO. Investors like you and me can, under certain conditions, buy the tokens before they are available on the market. The IDO token is launched on DEX. There are two different practices of public sale:

1. The issuer sets limit sell orders at various levels of increasing price.

2. The issuer conducts an auction, resulting in a demand-supply-driven sale price.

Listing is carried out on automated market maker (AMM) based exchanges such as Uniswap and Balancer. An issuer produces pool liquidity using its tokens and proceeds from sales to create a liquid secondary market for the token.

Liquidity incentivization is a referral to a wide variety of programs that the token issuer can run to kickstart product or service usage. Mining is very popular nowadays and can create strong incentives for people to support the platform.

How IdeaSoft can help you with Initial DEX Offering development

IdeaSoft has been providing innovative blockchain-based solutions for businesses since 2016. During this time, our team has implemented more than 250 projects in different domains. Blockchain is an extremely rapidly developing area where you always need to keep your finger on the pulse of market trends. This is what we do. Therefore, DeFi development is one of the most popular IdeaSoft services lately.

Having extensive expertise in software development, we can help you with creating and submitting an IDO token or building an Initial DEX Offering platform. Such a platform will allow you to attract users and fully benefit from IDO. Launching your own IDO platforms opens up opportunities for you to create your own community of fundraisers and investors, as well as form all the necessary conditions for the prosperity of your business.

By partnering with a leading crypto exchange development company like IdeaSoft, you can ensure the successful launch and scaling of your blockchain-based projects, backed by industry expertise and cutting-edge technology.The IdeaSoft team will take over the entire technical implementation of your idea, using the best blockchain development practices. Feel free to contact us to discuss the details of your project.

How to start a successful DeFi project

In the last couple of years, the financial industry has taken a course towards decentralization. Smart contracts are increasingly becoming an alternative to traditional banks, brokers, exchanges, and other financial organizations. 2020 has been a boom for DeFi. According to DeFi Pulse, the dollar value of assets locked into DeFi protocols surpassed $13 billion at the end of 2020, up 2,000% from January.

If in the wake of this popularity, you decide to create your own DeFi product and are looking for answers to questions about how to start a DeFi project, you have come to the right place. In this article, we’ll go over the main stages of DeFi development and the factors to look out for when choosing a development team and launching a product.

What is DeFi and what are the benefits of DeFi

As you probably know DeFi stands for decentralized finance. What is behind this definition? We can say that DeFi includes financial services and applications implemented using decentralized blockchain architecture. There are all the same investing, trading, lending, borrowing, and other financial platforms, but they work in a slightly different way.

Unlike traditional financial tools that have central authorities, DeFi is built on decentralized networks and enables peer-to-peer (P2P) transactions. This is exactly the advantage of blockchain that has been talked about since the advent of this technology. But in fact, it turned out that this is not so easy to achieve. For example, although cryptocurrencies are decentralized, we still need centralized platforms like crypto exchanges to use them. DeFi allows full decentralization and provides access to more effective financial platforms for a wider audience.

Criterion	Traditional finance	DeFi
Access	Determined by a service provider	Global
Transparency	Lack of transparency	Open-source available for audit
Interoperability	Low level of integration of various services	High level of interoperability
Control	Centralized authorities like banks and other financial firms	Not controlled by centralized authorities
Transaction price	High due to intermediaries	Low due to P2P transactions

Comparison of traditional finance and DeFi

DeFi is built on three pillars, including open source, transparency, and accessibility. This allows everyone to create their own smart contract protocol and become an investor, lender, or borrower without the need to rely on central authorities. In other words, DeFi is intended to become an alternative to traditional financial tools. Plus, DeFi services that exist on the same blockchain platform can be integrated in different ways due to the software compatibility of smart contracts, which allows the creation of entire decentralized financial systems.

Benefits of decentralized finance

Autonomy. Service users have 100% control over their assets. There is no custodian to manage their assets.
Transparency. DeFi services are open-source and open to audit. All transaction activities can also be checked.
Accessibility. There are no restrictions on the use of DeFi products. Regardless of geographic and regulatory factors, anyone can connect a crypto wallet to the decentralized blockchain network and start using it.
Security. DeFi is powered by blockchain. The information recorded in the blockchain cannot be changed. Therefore, no one can fake your data. Also, the absence of a single point of failure makes the entire system less vulnerable.
No need for intermediaries. All operations in DeFi are handled through programmable smart contracts. In other words, you run an algorithm that will be executed only if the conditions laid down in the contract are met. Therefore, there is no need to involve third parties to complete transactions.
Faster and cheaper transactions. Since there are no intermediaries, payments are significantly less expensive, and self-executing smart contracts speed up the processing of transactions.
Cost-effectiveness. DeFi can be both a cost-cutting way and a new way of investment. DeFi apps users can earn passive income from crypto assets and save on fees for transfers, loans, and deposits.

So, as we see, DeFi has many advantages. Decentralized finance can be the beginning of building more efficient and transparent financial systems that give us more control over our assets. Therefore, it is not surprising that the number of DeFi projects has been growing over the past year. Let’s find out how to start a DeFi project.

Starting a DeFi project

Whichever type of DeFi product you are developing, be it lending/borrowing platforms, crypto exchanges, open marketplaces, issuance apps, etc., you follow a specific development scenario. Let’s take a look at the main stages of creating DeFi products, where to start, and what to pay special attention to.

The process of developing DeFi product

DeFi product development is slightly different from regular software development. It’s all about decentralization. DeFi is not run by any financial organization or central authorities, blockchain enforces all the logic of an application or service. To make this happen, you need to build smart contracts containing all the rules of operation. The DeFi development process is as follows:

Business analysis

The development of any software product begins with business analysis. This is part of defining the project functionality and requirements, which will help choose the optimal tech stack and build the product architecture. We advise you to involve a business analyst at this stage so as not to miss a thing. A competent analysis will allow you to get rid of potential system vulnerabilities and create a reliable DeFi product.

UX/UI design

UX/UI design is an integral part of any application. If you want to provide a unique user experience, then you need the help of good designers. A user-friendly interface contributes to user engagement. Whatever interesting and functional features you come up with, you need to correctly implement them into design. Your product’s look and feel should help users reach their goals quickly, be it checking balances, executing a transaction, or something else. Therefore, we advise you not to neglect this part of the project.

Smart contracts development

The correctness and security of your DeFi app depend on the quality of smart contracts. They are the basis of any DeFi product since all the system’s operation logic is laid down in smart contracts. You should keep in mind that smart contracts can both increase the security of your system and make it more vulnerable to hacker attacks if the architecture is incorrect or the quality of the code is poor.

The smart contract development process is not that easy. All possible scenarios for user interaction with the platform should be described in them. Besides, everything must be transparent and secure at the same time, which is a truly challenging task for any developer. Plus, you should be able to quickly upgrade the terms of a smart contract, if necessary, without additional deployments. This means that a smart contract must be easy to read and not contain excessive amounts of code. Therefore, choosing an experienced development team is crucial here.

DeFi integrations

Integration of DeFi products is one of the key features of decentralized finance. One way or another, your product will be connected with other DeFi protocols. This allows you to create a functional financial ecosystem with additional possibilities for users. However, all these protocols have different features and interfaces, therefore you need to conduct a detailed preliminary analysis to make sure that integration is secure and efficient. This is also one of the most difficult parts of developing a DeFi project because your development team needs to examine the code and architecture of other DeFi before starting the integration.

Front-end development

At this stage, the development team brings the UX/UI design to life. By choosing the best front-end frameworks and libraries, front-end developers build your product’s user interface with smooth navigation and fast-loading pages.

Testing

Once you have implemented all the main features, it’s time to test your DeFi product. Before putting it on the market, check if it is reliable and safe in all aspects. It is not enough just to make sure that the system works as intended; you also need to conduct testing for vulnerabilities and loads. A security audit is one of the main tasks here. Bugs in the code can lead to loss of funds. According to The Block Research, there were 15 hacks of DeFi platforms amounting to $120 million funds being stolen in 2020. So, take testing seriously.

Read How to Hire Remote Blockchain Developers here.

DeFi security

Along with the benefits of decentralized finance come weaknesses. Since DeFi has an anonymous nature and lacks a regulatory framework, users of DeFi products are easy targets for scammers, hackers, and money launders. The weak architecture of smart contracts, bugs in the code, insecure integration make the system vulnerable. So, you should do your best to mitigate the risks of fraud and theft. Here are some tips for providing DeFi security.

Always check smart contract vulnerabilities and perform security audits.
Don’t share your private key with anyone. The creator of the product must be the only custodian of the private key. Also, store it offline.
Test the product for edge cases in smart contracts, such as an overloaded network or hacker attack. Timely identification of weak points will help you optimize the system and prevent real cases of fraud.

Don’t neglect audits and testing. Discuss with your development team all possible ways to ensure the security of your product. This is an essential part of starting a successful DeFi project.

Choosing a development team for a DeFi project

Now let’s move on to choosing a development team for your product. We see that the development of DeFi requires deep expertise in the field of blockchain and experience in implementing similar projects. Thus along with security, these two criteria will be of key importance when choosing software engineers. Due to the multitude of hacker attacks lately, people consider DeFi to be risky and are very careful about the choice of platforms and applications. Your task is to create a reliable product with the support of an experienced team that is fully aware of its responsibility for its work quality. So, what should your development team have:

Portfolio of successfully implemented blockchain projects
Experience in creating smart contracts
Experience with fintech projects
Skilled in-house developers
Clear security standards

We also advise you to work with companies providing full-cycle software development services. In this case, you will be able to close all project tasks working with one team, from design to testing and support. Many people note that this option is cost-effective and more convenient since you don’t need to sign contracts and communicate with several companies at the same time.

IdeaSoft experience

Now when you know how to start a DeFi project and what steps you should take, let us tell you how we can help you. IdeaSoft is a software development company with more than 5 years of history. Our portfolio includes over 250 projects, most of which are related to blockchain development. Crypto exchanges, including decentralized (DEX), lending/borrowing platforms, NFT marketplaces, issuance platforms, DeFi aggregators, and more.

IdeaSoft’s team of talented and experienced specialists can implement projects of any complexity, adhering to the best security practices. Among our clients, you will find Biteeu, a fully licensed and compliant cryptocurrency exchange for the European Union; Bochica, the first Colombian blockchain; Securutize, an issuance platform that entered the list of Blockchain 50 Most Promising Companies within the Blockchain Ecosystem by CB Insights in 2020, and more.

Feel free to share your ideas with the IdeaSoft team. We will do our best to bring them to life with the help of advanced technologies. Contact us to get a free consultation with a technical specialist or a project estimate. And good luck with your DeFi product, you’re on the right way!

The most promising types of DeFi projects

DeFi is a fast-growing market that consists of various types of decentralized financial projects. According to DeFiPulse, the total value locked in DeFi is only increasing and already reached $50 billion. So there is no surprise that DeFi has become one of the most popular blockchain trends in the past year. This popularity has led to the emergence of many promising products and even more are under development. In this article, we’ll tell you what DeFi is, what the DeFi ecosystem consists of, and how to get started with DeFi.

What is DeFi

DeFi (decentralized finance) is a set of specialized services based on smart contracts and decentralized applications (Dapps), which form a decentralized financial ecosystem. This ecosystem provides users with access to a variety of financial services, such as investing, lending, trading, etc. There are a lot of different types of DeFi projects. The best DeFi projects are available to everyone 24 hours a day with no restrictions due to the active development of blockchain technology and the Ethereum platform in particular.

Key advantages of a decentralized financial system (DeFi):

Accessibility to any user, regardless of geographic location, credit history, and other limitations of the centralized financial system.
Transparency of all blockchain transactions. All smart contracts are open source, so they can be easily audited.
Self-custody. Thanks to decentralized features users always keep custody of their assets and control of their personal data.
Permissionless allows users to interact with applications directly through browser extensions (or wallets) and also provides the ability to create their own applications.
Interoperability provides amazing opportunities to combine new DeFi applications with existing services. They communicate with each other via universal protocols and developers can combine them to create entirely new products.

The best DeFi apps have a multi-million audience, and the volume of transactions exceeds millions of dollars. According to DeFi Pulse, the dollar value of assets locked into DeFi protocols surpassed $13 billion at the end of 2020, up 2,000% from January. Since the market is young, there is not much competition, so it is easy to enter this market now. It seems like top DeFi projects are going to hit the jackpot this year, as interest in this market is only increasing.

The current DeFi ecosystem

DeFi is on the rise now because it can be a great alternative to traditional financial systems. And if you can create a product that is interesting to the audience, then you can take a good place at the origins of the DeFi market. What are the top DeFi projects? It is difficult to list them all. So we have put together a list of the most popular types of DeFi projects.

Defi projects within DeFi ecosystem — Source: tokeny.com

Decentralized crypto exchanges (DEX)

A decentralized exchange (DEX) is an exchange that operates on the basis of a distributed ledger. It doesn’t store user funds and personal data on its servers and acts only as a platform for matching bids to buy or sell user assets. Trading on such platforms takes place directly between participants (peer-to-peer) without any financial intermediaries. However, most of the existing exchanges that call themselves decentralized are not completely decentralized: they use their own servers to store trading data, and users keep private keys on their own.

Here is how centralized exchanges work. Centralized exchanges are managed by a specific company or person who is profit-oriented. Exchange managers are responsible for the protection of user data and information about trades, fully control the platform and make decisions that are important for the development of the project. But this is not the case with decentralized platforms. Decentralized crypto exchanges are managed automatically or semi-automatically with the involvement of platform participants in the process of making important decisions. Such platforms provide the technical possibility of direct interaction between the participants and use a distributed ledger (blockchain) to store and process all (or almost all) data.

Examples of decentralized exchanges (DEXs): IDEX, Waves Dex, Bancor Network.

Lending/borrowing platforms

Lending/borrowing platforms are services that provide an opportunity to borrow or lend through a crypto network. Technically, this lending space is similar to a traditional institution that offers financial loans to people and businesses. The only difference is that DeFi does it without intermediaries.

Any blockchain user can transfer coins to a certain lending platform, which will lend crypto to another user at interest. DeFi lending is governed by smart contracts. When a person lends or borrows funds, he or she signs a contract with the other party that specifies all the details, such as repayment period, interest rate, etc. Compared to traditional lending, DeFi offers notable advantages. The most important of them is transparency and simplicity of the process thanks to the absence of third parties. All you need is an account on one of DeFi’s platforms and a crypto wallet.

Examples of lending/borrowing platforms: Compound, MakerDAO, Nuo Network.

DeFi aggregators

According to Messari, about 20% of the total trading volume of non-custodial Ethereum exchanges is generated with the help of the so-called DeFi-aggregators. Such services not only help reduce transaction costs but also simplify user interaction with DeFi services.

A DeFi aggregator is a complex platform that collects and sorts information about different DeFi services. DeFi aggregator is a base of a large amount of information on a specific topic in one place. Thanks to DeFi aggregators, users save their time. In particular, they don’t have to search for data on different sites.

The advantage of such platforms is that there is an opportunity to set up a filtering system. The functionality of the aggregator depends on its focus. For example, platforms like RAY match users with the most profitable DeFi services, helping to maximize the profitability of blocked crypto assets. DEX-aggregators 1inch and DEX.ag enable users to exchange crypto-assets at the most favorable rate with minimal “slippage”.

Examples of DeFi aggregators: 1inch, DEX.ag, Value DeFi.

DeFi payment solutions

DeFi payment solutions create a more open economic system for users and help large financial institutions streamline market infrastructure and better serve wholesale and retail customers. With DeFi solutions, users can securely and directly exchange cryptocurrencies with each other, without intermediaries.

DeFi payments apps and protocols provide better value-added payment solutions, such as cheaper transactions, instant payment apps, and more. Additionally, cross chain DeFi solutions enable seamless transactions across different blockchain networks, enhancing the versatility and reach of DeFi payment systems.

Examples of DeFi payment solutions: Celer Network, Connext Network, Matic Network.

DeFi insurance

Decentralized financing has created a need for new forms of insurance. Large cryptocurrency deposits can be stolen or devalued within minutes. Smart contracts can contain unforeseen errors, making any funds they contain permanently unavailable. These risks require a new insurance system. Players in the decentralized insurance space are providing democratized versions of traditional insurance. The insurance mechanism is simple. Users of an insurance platform provide liquidity to cover damage in the case of an insured event, and they themselves receive interest for providing liquidity.

Most insurance projects on the market today offer a wide range of services, including insurance against hacking of protocols, technical and other errors that may lead to loss of funds, the bankruptcy of a token or stable coin issuer, and many others. When selecting an insurance provider, people pay attention to the territorial coverage, the services offered, the insurance payments, and the list of insured events, as well as the technical and legal features of the project.

Read our recent article on Insurance trends 2021

Examples of DeFi insurance platforms: Nexus Mutial, ETHERISC, VouchForMe.

How to get started with DeFi

If you have decided to develop a DeFi product, you definitely need the help of an experienced development team. Developing decentralized platforms requires good expertise and a deep understanding of blockchain technology. The last year has been a boom for DeFi, but it also showed the vulnerabilities of decentralized finance if you neglect the security and quality of smart contracts. Therefore, to get started with DeFi, discuss your idea with the professionals to find out the best ways to implement it.

Emerging trends like SocialFi, which blend social media with decentralized finance, are also worth considering for innovative financial solutions.

To maximize your project’s potential, consider partnering with experts who can develop cross-chain DeFi platforms, ensuring seamless interoperability and enhanced functionality.

IdeaSoft has been developing different types of blockchain projects for clients all over the world for more than 5 years. During this time we have delivered more than 250 projects including crypto exchanges, blockchain protocols, NFT marketplaces, issuance platforms, trading/auction platforms. Our in-house development team knows what tech stack and architecture to choose for different kinds of projects. The extensive experience of IdeaSoft developers allows us to create products of any complexity, and the business model we work on will help you cover all project tasks within one company, from business analysis and design to programming, testing, and support.

Feel free to share your ideas with the IdeaSoft team. We will do our best to bring them to life in the best way. Contact us to get a free consultation with a technical specialist or a project estimate. And good luck with your DeFi product, you’re on the right way!

How to Develop an NFT Marketplace: Ultimate Guide

I would like to start with some impressive numbers. According to research published on NonFungible.com, the total value of NFT transactions in 2020 increased by 299% compared to the same period last year and exceeded $250 million. Also, the total number of active wallets performing NFT transactions increased by 97%.

Experts predict that non-fungible tokens (NFTs) will become the driving force behind the virtual economy in the next decade. The point is that the NFT market is expected to grow, and it’s time to think about how you can benefit from it. Creating an NFT marketplace is one of the great opportunities for this. So, I have put together a detailed guide that will answer the questions of how to develop an NFT marketplace and succeed. Get ready and let’s get started!

Once again, what are NFTs?
What is an NFT marketplace?
How does an NFT marketplace work?
NFT marketplace development: where to start
3.1 NFT marketplace features
3.2 NFT marketplace development with OpenSea SDK
3.3 Custom NFT marketplace development
What to look for when building an NFT marketplace?
How IdeaSoft can help you build an NFT marketplace

Once again, what are NFTs?

When we talk about NFTs we mean non-fungible tokens. Most NFTs are built on Ethereum using ERC-721 and ERC-1155 standards. Unlike regular tokens, which are fungible and have the same value, each NFT is unique and cannot be replicated, replaced, or split into parts. For example, if you lend someone $10, it doesn’t matter if you get the same bill back. You just need $10, right? But when it comes to collectible coins, each of which is unique and has its own value, the situation changes dramatically. NFT is this unique coin, one of a kind.

NFTs have some properties that differentiate them from other tokens:

Uniqueness. Each NFT token is a unique asset and it has a unique set of metadata.
Indivisibility. NFT cannot be divided into smaller denominations.
Authenticity. Each NFT has an owner and this information is easily verifiable.
Non-interoperability. One NFT is not equal to another NFT, you cannot simply exchange them, unlike Bitcoin or Ether, for example.

These properties make non-fungible tokens ideal for representing rights to digital assets, which are also unique. Such an asset can be an image, music, any digital artwork, game item, or game character, and so on. Thus, many creators, musicians, collectors have got a chance to become part of the online economy by tokenizing their assets. But still, they need marketplaces for selling/buying NFTs. NFT marketplaces could operate as an auction platform allowing creators and buyers to find and select the best deals for both.

Read the Introduction to Non-Fungible Tokens (NFTs) to find out more about what NFTs are and how they can be used.

What is an NFT marketplace?

Unlike Bitcoin or Ether, you cannot directly exchange non-fungible tokens on various crypto exchanges. To buy and sell NFTs, you need dedicated platforms. NFT marketplace is a decentralized platform that allows you to store and trade non-fungible tokens. Lots on such a platform can be offered at a fixed price or sold through an auction. Most NFT platforms require buyers and sellers to have crypto wallets for carrying out transactions. There are different types of NFT marketplaces. Some are more exclusive, while others are focused on letting anyone create and sell their art.

There are universal platforms where you can find anything from art to domain names, such as OpenSea, Rarible, Mintable. On these marketplaces, you can turn any creations into items and start selling them. Other platforms are niche. They focus on selling certain assets. For example, Valuables allows you to sell and buy tweets (you’ve probably heard that Twitter CEO Jack Dorsey auctioned off his first tweet as an NFT); Looking Glass Factory offers a marketplace for selling digital holograms, and so on. Niche marketplaces are gaining popularity because they have a more clearly defined target audience and solve specific problems. Also, you can find closed marketplaces available only for approved creators, such as Foundation.app. So, you should definitely think about platform type before developing an NFT marketplace.

How does an NFT marketplace work?

NFTs are implemented using smart contracts. Each token contains a set of unique information (metadata) recorded in its smart contract, and a blockchain provides its immutability and security. To build an NFT marketplace, we need to create a token protocol, usually on the Ethereum network. This is a special group of smart contracts that ensures the implementation of certain functionality of marketplace features. Further, this protocol is integrated with the marketplace system.

Now let’s talk about how NFT marketplaces work from the client-side. For the most part, all NFT auction platforms share a common flow. First of all, a user needs to sign up for a platform and install a digital wallet to store NFTs and cryptos. The registration process on the platform is directly related to a crypto wallet, basically, you sign up with your wallet. Then the user can create his collection by loading items to display his work. The user can also choose which payment tokens he’d like to accept for his art and set a secondary sales fee if the platform suggests it.

The next step is listing items for sale. The user can select a bid for an auction or a fixed price. When listing an item for sale, a transaction is created that launches a personal trading smart contract for the user wallet. The platform may require collection moderation, and after approval, your NFTs will appear on the list for sales and you can accept bids. Usually NFT marketplaces charge some fee on the purchase amount. Also, NFT platforms handle the transfer of items and funds, so for users, the whole process looks pretty simple.

NFT marketplace development: where to start

Now that you know how NFT marketplaces work and what types of these platforms are on the market, it’s time to discuss your project in more detail. If you wonder how to develop an NFT marketplace, I would suggest you start with the business part. As with any other software product, you need to know well who you are building your platform for and what problems it will solve. You have to decide on a list of features and choose one of several options of technical implementation of your idea.

NFT marketplace features

NFT marketplace combines marketplace and auction platform features. Users should be able to create their own collectibles and sell them. Also, different marketplaces offer some additional functionality to attract users and make their user experience exceptional. Start your list with core platform features that will allow users to carry out basic operations:

Storefront

The NFT auction platform is a marketplace, so it should have a storefront. Provide users with all the necessary information about an item: preview, bids, owners, price history, etc. OpenSea, for example, also displays chain info for checking the smart contract so a buyer can be sure of the authenticity of the purchased NFT.

Searching for items

As with any marketplace, your platform should support category management and tagging to make it easier for users to find collectibles they are interested in. Implement a search bar on the site, add categories. For example, OpenSea divides items into the following categories: Art, Domain Names, Virtual Worlds, Trading Cards, Collectibles, Sports, Utility. You can choose yours.

Filters

Filters also make it easier to navigate a site, especially if there are a lot of collectibles on the platform. Give users the possibility to select items by category, payment method, collection, listing status (e.g. “new”, “has offers”, and so on). This will significantly reduce the time between NFT selection and purchase.

Creating listings

The process of NFTs submission and creation of the collection should not take long. Think about the flow and most likely you need something like OpenSea’s Collecting Manager to easily manage collections and items. On the collectible creation page, a user should be able to upload a file and fill in the basic token properties such as name, description, tags. I advise you to sign up for several marketplaces to find out what flow of creating NFT and listing it for sale you like the most, what stages you would do better.

Status of listing

Status of listing also assists users in selecting NFTs for purchasing. By searching, sorting, and filtering, they can find the best options faster and easier. Also, statuses help sellers navigate better as well, especially if you want to implement a collectible verification process. This way you can inform sellers at what stage of the verification process their items are.

Buying and Auction

The development of the auction mechanism for your platform is one of the most critical parts of the project. You need to provide bidders with an easy-to-use and efficient NFT buying system. It is better to include the bid expiration date in the form to give users more control over their bids. Plus, the auction watchlist allows viewing details about the current status of bids.

Wallet

Your users need wallets to send, receive and store cryptocurrencies and non-fungible tokens. The easiest way to do this is to provide a user with a connected wallet that he already uses. For example, Rarible offers platform members to connect one of the wallets of their choice: MyEtherWallet, Coinbase Wallet, Formatic, or WalletConnect. OpenSea offers several additional options. So, we also need to compile a list of wallets that must be supported by the platform and ensure their integration.

Ratings

Ratings are a great way to help new users choose NFTs. Plus, they act as a reward for the best top sellers, confirming their reliability. So you can use this as an additional feature.

In fact, NFT marketplace features are not limited to those listed. Each platform offers some kind of unique functionality. This way they try to improve communication with users and increase the level of user engagement. Rely on your ideas. For example, you can implement a push notification system to inform users about bid changes, new collectibles, or the status of their listings. Or develop a community by creating a forum on the platform. Some marketplaces also have their own blogs. Draw the perfect NFT marketplace in your mind and it will become the starting point of your project.

Read also ‘How to start a successful DeFi project’

NFT marketplace development with OpenSea SDK

Once you have a list of features for your future platform, we can talk about the technical implementation of the project. This is a more engineering answer to the question of how to develop an NFT marketplace. You can find some ready-made tools for building non-fungible token marketplaces. For example, OpenSea offers an SDK that allows you to create such a platform using OpenSea’s infrastructure, but with your design on the top.

OpenSea’s SDK opens up enough opportunities for building a functional NFT marketplace, including the ability to sell items for your own ERC 20, make a profit, enable private listings, bulk transfers, and more. The SDK allows you to create ERC-721 or ERC-1155 (semi-fungible) items. Also, the good news is that you don’t need to deploy your own smart contracts. This toolkit greatly simplifies the NFT marketplace development process with ready-made blocks. However, If you don’t have a technical background, it will be quite difficult for you to do it yourself. Therefore, I advise you to contact blockchain specialists who know how to develop an NFT marketplace using the OpenSea SDK.

Custom NFT marketplace development

In some cases, off-the-shelf toolkits may not meet all project requirements. This is when the custom NFT marketplace development comes into play. With the support of an experienced development team, you can create a non-fungible tokens marketplace with any functionality from scratch. While this option will cost you more, it has many advantages. As a minimum, you are not limited by the SDK’s capabilities. You can implement any features you have in mind and build a more complex solution that will help you stand out from competitors and attract more users.

Steps of nft marketplace development — Steps of NFT marketplace development

The custom development process for the NFT marketplace consists of the following steps:

Business analysis. At this stage, you need to describe the business part of your project: for whom your product is being created, which features you need to implement, which user flow to build. The more accurately you study user behavior, the more user-friendly solution you can create. Nobody likes complexity. Therefore, our task is to build a simple and effective marketplace architecture. I advise you to include business analysts at this stage so as not to miss a thing.
UX/UI design. When developing a marketplace, the UX/UI part is crucial. The user interface should be clear and simple. Good UX/UI is the golden mean between usability and a nice look and feel of your platform. I highly recommend consulting a professional when creating the UX/UI for your product. If users experience issues interacting with your marketplace, you gave the money away, and no talented developers can fix that.
Smart contract protocol development. Back-end is the logic of your platform. When designing an NFT marketplace, this step will be different from a similar step in standard custom development. The thing is NFT marketplace is a decentralized platform, so most of the data is verified on a blockchain. For instance, Ethereum allows the network to run certain scripts to make an app decentralized, so most of the backend logic is transferred to the decentralized part.
Front-end development. This is the stage for bringing your design to life. Choosing the best framework for your project, software developers implement all the necessary features on the client-side. The main task here is to ensure fast operation of the platform, good performance, and reliability.
Testing. You should never skip this step. Detecting and fixing bugs promptly makes you sure that your product is ready to launch. Plus, software testing allows you to make sure that your platform works as intended and meets the original project requirements. Remember that a properly tested software product provides reliability, security, and high performance.
Launching and support. Once you are sure that your platform is bug-free, it’s time to launch your NFT marketplace. Many people think that this is the last step, but software is software, you need to constantly work to maintain and update it. Plus, speaking from personal experience, I can tell you that 80% of clients usually come back to us for implementing new features, because the business needs to meet the growing expectations of users. So, don’t lose contact with your development team, which will become your reliable partner for years.

Check with blockchain developers to find out if you need custom development or you can use the SDK. To do this, be prepared to provide a team with a list of platform features.

What to look for when building an NFT marketplace

There are two main things you should pay special attention to when building an NFT marketplace. They are essential to your success. Among these things are security, and the choice of an experienced development team. Let’s dwell on each point.

Security

You cannot ignore security when it comes to finances. Blockchain is a fairly reliable technology that has built-in security mechanisms, but additional features never hurt. You may need tools to inspect and detect malicious content that could harm your users. You can also implement additional checkboxes in the process of publishing or buying tokens so that users can be sure of their authenticity and reliability. A user profile is also an important security element. Implement at least basic KYC (know your customer). For example, OpenSea invites users to add links to their social media accounts to help NFT buyers find out more information about creators.

Experienced blockchain development team

So we got to the choice of the development team. I don’t want to waste a lot of time explaining how important it is to work with experienced blockchain developers to get a quality software product. It’s obvious. I’d rather try to give you some advice when choosing the right software provider.

First, outsourcing development teams will help you significantly speed up the process of creating your NFT marketplace. Especially when it comes to companies that provide full-cycle development services. This is the most cost-effective solution.

Second, check the expertise of the company you intend to work with. How to do it? Check the delivered projects, make sure the team has experienced blockchain developers, find feedback on the company’s work. Make sure a software provider can cover all your project-related requests.

Finally, just find out if you enjoy communicating with the team. If communication is easy and casual, and the team understands your goals, your project is more likely to be successful.

How IdeaSoft can help you build an NFT marketplace

After you’ve learned how to develop an NFT marketplace, it’s time to talk about how our team can help you. IdeaSoft is a custom software development company providing full-cycle software development services, from business analysis and UX/UI design to deployment, testing, and support. Since 2021, IdeaSoft has been part of Sigma Software Group, Swedish software development and IT consulting company with over 1,150 specialists in Ukraine. Blockchain development is one of the main specializations of IdeaSoft.

The five-year history of the company includes successful projects of crypto exchange platforms, blockchain protocols, trading platforms, issuance platforms, and more. Our client list includes Biteeu, a fully licensed and compliant cryptocurrency exchange for the European Union; Bochica, the first Colombian blockchain; Securutize, an issuance platform that entered the list of Blockchain 50 Most Promising Companies within the Blockchain Ecosystem by CB Insights in 2020. Feel free to check out our portfolio to find out more about these projects.

If you want to build your own NFT marketplace, we can offer you several options, including custom development and creating a marketplace based on the OpenSea SDK. We are not limited to the types of digital assets, so we can develop an NFT platform that meets all your requirements. IdeaSoft team can also develop separate NFT collectibles, like Hashmasks, if you need to sell a series of tokens. For this, the distribution of tokens is created once, they are divided by rareness and sold as one large gallery. The value of assets depends on the rarity of tokens.

IdeaSoft nft marketplace development services — IdeaSoft NFT marketplace development services

Check the Blockchain development page to learn more about IdeaSoft services or contact us here to discuss your project. I can’t wait to hear your ideas!

Introduction to Non-Fungible Tokens (NFTs)

If you follow the news of the crypto world, you’ve probably already heard about NFTs, which along with DeFi have become the hottest topics of 2020. Having gone from gaming to a promising way of real-world asset tokenization, NFTs have every chance of becoming a widespread solution, experts say. Read this article to find out what non-fungible tokens are, a new market disruptor, or just another hype.

What is a non-fungible token (NFT)?

Non-fungible tokens were first introduced back in 2017. Unlike regular cryptographic tokens, NFT represents a unique digital asset that cannot be replicated. Any cryptocurrency is essentially a token, be it Bitcoin or Ether or something else. These tokens are fungible because they are tradable for each other, and their value remains constant. Hence, you can easily exchange one Bitcoin for another Bitcoin. But this doesn’t work with non-fungible tokens, which display the rights to a unique asset of its kind. Essentially, NFT is a way of asset tokenization.

For example, you can digitize the right to a work of art and receive a token to prove it. There is only one such token that relates to your asset and you cannot find the same equivalent to it. Even if you exchange your token for an art object for another token that represents an art object, they are not the same or equal. Just like any real-world assets are unique, NFTs representing them are unique too.

Non-fungible tokens have a number of specific characteristics, which include:

Uniqueness. Each NFT token contains a unique set of data and represents a unique asset.
Indivisibility. You cannot divide NFTs into smaller denominations, unlike fungible tokens like Bitcoin, for example.
Authenticity. Since NFT is powered by blockchain, it is quite easy to track the validity of your token and its owner thanks to such blockchain properties as traceability and immutability.
Non-interoperability. NFTs cannot be directly traded one to another even if they are on the same platform. You can buy and sell NFTs on special marketplaces.

Criterion	Fungible token	Non-fungible token
Type of token	Uniform	Unique
Exchangeability	Can be exchanged for a token of the same type	Cannot be exchanged for a non-fungible token of the same type
Divisibility	Divisible into smaller units(1$=100 cents)	Cannot be divided
Data registered in blockchain	Only the balance	ID, ownership, metadata
Examples	Bitcoin, Ethereum	Art, property (house)

Comparison of fungible and non-fungible tokens

The main advantage of NFTs is their uniqueness, which allows us to apply them to any object in the real world, without the risk of fraud. As we remember, all data recorded on a blockchain remains there. Also, for many NFTs are an opportunity to trade real-world assets on digital exchanges.

How do non-fungible tokens work?

Currently, most NFTs are built on Ethereum using ERC-721 and ERC-1155 standards. The ERC-1155 token standard allows one contract to contain both fungible and non-fungible tokens. Software developers can use Ethereum’s off-the-shelf tools to create new NFTs. Meanwhile, other decentralized platforms like EOS and NEO also offer their NFT standards. Businesses looking to enter the NFT space can take advantage of professional NFT development services to build custom solutions tailored to their needs.

NFTs are implemented using smart contracts. Each token contains a set of unique information (metadata) recorded in its smart contract, and a blockchain guarantees the immutability of this data. The transfer of ownership of the NFT takes place using a blockchain transaction, which can only be authorized by the private key of the owner of the NFT, just like a regular blockchain transaction. Thus, we receive a reliable permanent digital confirmation of the ownership of the asset.

It is important to understand that the value of each token is unique. NFTs can be traded on open marketplaces that connect buyers to sellers. Examples of such NFT marketplaces are OpenSea, Rarible, Decentraland, and others.

Read The Ultimate Guide to Developing an NFT Marketplace

NFT use cases

The beginning of the use of NFT is associated with gaming. Games like CryptoKitties and Blockchain Cuties have allowed users to create rare items, and monetize them. In the game Gods Unchained, users can collect and sell unique cards. In these examples, blockchain looks like an interesting tool for maintaining the online economy of virtual worlds, but gradually this model began to be applied in the real world. Non-fungible tokens are great for real asset tokenization. Tokenization helps to increase the liquidity of assets in areas such as real estate, art, collectibles, and others.

NFT segments distribution (2020), Source: *Nonfungible.com*

Here are some NFT use cases besides collectibles and gaming:

Art – NFTs have opened up new opportunities for the art market. Tokens allow transferring the right to an object of art in a digital form, which makes it possible to earn money on the use of these objects in digital space. Blockchain allows you to track who exactly owns an art object and protect the rights of the author. You can already find platforms for publishing digital art such as OpenSea, Rarible, etc.
Identity – NFTs can also be used for digital identity as they allow for the unique characteristics of each token. With the help of non-fungible tokens, we can digitize our academic qualifications, medical history, and other unique information. This will give users complete control over the use of their data.
Domain names – NFT is an effective tool for decentralized domain name services. Tokens can now verify ownership of a specific crypto domain, such as name.eth or token.crypto.

The growing interest in NFT is driving new use cases for these tokens. The combination of NFT and DeFi is considered particularly advantageous, as reliable proof of ownership of a unique asset can make decentralized financial products even more popular.

The future of NFTs

The NFT market has shown growth in the past year. In the first half of 2020, the cumulative turnover of non-fungible tokens reached $232.5 million, showing an increase of 294.29%, compared to the first half of 2019, according to the Nonfungible.com report. The growing interest in non-fungible tokens is attracting new investments. According to the L’Atelier BNP Paribas report, NFT investments rose 299% in 2020. Also, Nonfungeable.com found that the number of buyers of NFT rose 66% in 2020. According to forecasts this year, we can also expect an increase in the NFT market as an interest in this technology has just begun to grow. NFT has yet to be proven to be effective or useless. Therefore, for now, we can expect the emergence of new projects related to non-fungible tokens.

Summing up

Non-fungible tokens differ from ordinary crypto tokens. They have such properties as uniqueness, indivisibility, and non-interoperability. Because of these properties, NFTs are an excellent way to tokenize real-world assets for further use in the digital space. It’s hard to say right now if NFT will be the next big thing in crypto, as interest in this topic is growing and we don’t have enough case studies to evaluate its effectiveness. However, the current projects look pretty promising, and there is no reason not to try new software solutions using NFT. ERC 404 tokens offer a new standard for managing unique digital assets.

If you have an idea for a blockchain project, the IdeaSoft team will be happy to help you bring it to life. More than 5 years of experience and 250+ completed projects have allowed IdeaSoft developers to gain extensive expertise. We worked with a variety of blockchain-based projects from creating smart contracts to building crypto exchanges. Check out the blockchain development services page and feel free to contact us to discuss your project.

How to Use Blockchain for Digital Identity Management

Collecting, verifying, and managing user identities is essential to the functioning of the online economy. Whether it’s financial transactions or medical records, systems must ensure that only authorized users can perform actions on certain data. As users, we also want to be sure that our personal information will not fall into the hands of third parties.

However, most of the data are now stored in centralized databases and on centralized servers, increasing the risk of these data being leaked or stolen. There is no doubt that data breaches can have dire consequences for banks, governments, and healthcare institutions. Therefore, this encourages companies to invest in developing blockchain-based digital identity solutions.

What is digital identity

A digital identity is personal information that exists on the network and proves your identity. For example, digital ID enables us to verify our identity when logging into an email account or making transactions online without the need to provide physical ID documents such as a passport or credit card. To do this, a user is usually assigned an individual identifier that allows systems to find him on the Internet.

For example, you get your own digital identity when registering on a social network, creating a username and password. Or when you consent to the processing of data in your browser and allow a site to collect cookies, the site generates your tracking ID. Thanks to this identification method, we can safely store and manage our personal information and perform banking transactions, open bank accounts, have access to our medical data, and the like.

As you can see, digital identity speeds up many processes in our lives, from interaction with public authorities and carrying out business transactions to logging into personal accounts. However, digital identity has some challenges and is associated with certain risks of leakage or theft of sensitive data. If your digital identity management system is weak, you may have more problems than benefits.

Challenges of digital identity management

Digital identity is convenient and effective. However, in the era of digital transformation, when a huge amount of data goes online, cyberattacks are also on the rise. Therefore, the use of digital ID is associated with certain risks and has its own challenges. Safe data management is the number one goal for online service companies. Users won’t do business with a company again if they experience fraud on its platform. Therefore, companies need to implement security features into their products as well as work on internal plans for fraud prevention and risk assessment. And this is a real challenge that requires large investments and wide expertise in the field of cybersecurity.

Other challenges of digital identity management include:

Confidence in the legality of the transaction. Not all digital IDs are easy to obtain. If we are talking about banking or government structures, then it may take time to obtain official legal confirmation of identity. The digital IDs that companies offer you must comply with government regulations. Also, there are challenges in compliance with international data privacy regulations.
Lack of transparency and control over the use of personal information. We do not always understand how our personal data is used. GDPR has been an achievement in recent years, but it is not enough, because we do not really have a mechanism for verifying where our data is used and how we can control it.
Different IDs for different services. Unfortunately, the lack of a uniform accepted digital identity management system means you need to have an ID for every service you use. This is inconvenient because, with many different accounts, users forget their credentials, lose passwords, and become more vulnerable to cyber-attacks.

Building a trusted identity management system with blockchain

An ideal digital identity management system combines usability, security, and privacy. However, traditional ID systems are still far from that. They are highly vulnerable and have single points of failure, which increases the risk of fraud. And here’s where blockchain comes in. This technology can become a reliable mechanism for managing identities due to its decentralized nature.

This is how it works. Blockchain is a database that stores information in the form of blocks. Each block is created based on the previous one and therefore all blocks are linked. No block can be removed invisibly without destroying the entire system.

Thus, blockchain provides transparency and traceability of the system, while ensuring security through reliable cryptographic methods. Users use paired keys to manage their data on a blockchain. A public key is a cryptographic code that is generated using encryption algorithms and is used to convert a message into an unreadable format. This key can be shared with others to help identify your identity. A private key is a key that only the user knows, it allows the message to be decrypted, so a secure transmission is ensured. Each public key matches only one private key.

Thus, blockchain technology can provide a so-called self-sovereign identity, where users can easily and securely control their IDs, choose which data and which platforms to provide access to, and which data to keep secret. Also, you no longer need passwords and many different IDs because the self-sovereign identity сan provide interoperability of the ID across multiple platforms. Blockchain-based solutions can make this reality as they give users privacy and freedom to control their personal information while making data shareable in a secure way.

Decentralized storage

Blockchain technology solves the single point of failure problem by providing a distributed database. Storing sensitive data in one centralized location is always a risk because once fraudsters break into the system, they get everything. A decentralized database stores information on hundreds of nodes. In such a system, a verifier is sufficient to obtain pieces of identification information to check its correctness and reliability. Thus, users can be sure that their data is reliably protected and no outsider will have access to the entire volume of information, but only to the permitted fragments sufficient for identification.

Criterion	Centralized data storage	Distributed data storage
Access	A single central database file	Multiple database files located in different places
Data transmission speed	Slower	High
Managing	Easier to update and back up data in one file	Data need to be synchronized
If the database fails	Users lose access to the database	If one database fails, users have access to other files
Who controls data	Enterprises	Users
Data security threat level	High	Low

Comparison of centralized and decentralized data storage

As you can see from the table above, a distributed data storage has many advantages for users by providing faster and more secure access to information. Since the data is stored on several nodes, the fall of one database will not entail downtime, users will still be able to access their data. Also, this format limits access to data preventing cyber attacks.

Immutability

Blockchain is well known for its reliability. The system of blocks linked to each other guarantees immutability, since it is quite difficult to make changes to information once recorded on a blockchain. At first glance, it might seem like a problem. But not for digital identity. The very essence of identity is to prove that your identity is unique and you cannot change it every day. To do this, all members of the network must be sure that you or someone else cannot simply change records and falsify data. Non-alteration of records reduces the risk of fraud and increases the level of reliability. In this case, you do not have to prove your identity over and over again, wasting time on it. Immutable data is reliable proof of who you are.

But immutability is not enough to be absolutely sure of the reliability of the digital identity management system. You need transparency, and blockchain can provide that as well. Blockchain makes it possible to track data as all blocks are linked. This means that information can be shared when and how the owner wishes. And it is safe because the information cannot be changed. Thus, thanks to blockchain technology, you get an ultra-reliable digital identity management tool that ensures the transparency and immutability of records at the same time.

Privacy and security

Decentralized digital identity on a blockchain can give users complete control over their digital data, eliminating the need for third parties. Without the user’s consent, no data can be shared. The user can choose to whom and what data to send, and also have an idea where exactly and for what purposes his personal information was used. This is what we want, but it is impossible to implement this in the centralized storage of information since we cannot know for sure if our data has not been transferred to someone else. Blockchain opens up such opportunities. We can independently manage our digital IDs by confirming transactions using private keys.

A definite plus of blockchain technology is that it does not actually store sensitive data. Identities are stored in an encrypted digital wallet and transmitted over the network as individual codes. All information is encrypted, but available in the public ledger of the blockchain, to which the user has private and public cryptographic keys. The cryptographic technology used in the blockchain allows the user to prove the existence of funds, assets, or identifying information without revealing the details behind it. All this provides complete secure digital ID management.

Prospects for using blockchain digital identity management

Blockchain identity management can benefit a wide variety of industries, as we solve more and more tasks online: from making payments to voting. Blockchain technology will allow companies to create digital identity solutions which are more secure and transparent for users. Here are just some use cases of blockchain identity application.

Healthcare. For the healthcare industry, blockchain-based identities can be a reliable solution for managing patient data. Telemedicine is gaining popularity, but the lack of a unified system for identifying patients and storing their medical history significantly slows down the development of this direction. The immutability of data in a blockchain allows creating reliable identities both for patients who decide for themselves who and for how long to give access to their data, and for healthcare providers who can confirm their qualifications.
Financial services. Digital identity on a blockchain will speed up the customer onboarding process for banks, as users will not need to upload additional documents to verify their identity, and banks will not need to verify them. A fast and reliable identification process will also let users easily issue loans, make payments, and use other services of financial companies.
Government. The adoption of a single digital identity for citizens at the state level will help users of online services get rid of the need to have different IDs for different platforms. Blockchain provides enough transparency for citizens and enough security for a government. You can find real cases. For example, Estonia has established a complete electronic government system based on blockchain technology and provides most public services digitally.
Telecom. For telecom operators, managing user data is of paramount importance, which is why it is one of those industries that is the first to apply the latest technologies to increase efficiency and improve user experience. Blockchain identity will allow such companies to get faster remote KYC (know your customer) for new subscribers and improve identity management, which will let existing customers remotely subscribe to new services. Blockchain can also help reduce the level of fraud due to the traceability of records.
E-commerce. Online shopping has become an integral part of our lives. When we place orders we are often asked to fill in information about ourselves such as name, email, phone number, address, etc., which takes time to do it over and over again. Signing up on multiple e-commerce platforms using a single ID is less time consuming and blockchain can make it real. The technology also makes it possible to increase the level of security when making payments, since a retail company does not need to store users’ payment data, which also reduces the cost of storing users’ information.

Wrapping up

So, blockchain identity management can be an excellent solution for a wide variety of companies that deal with online services. Users will get more privacy and more control over their sensitive data. Service providers, in turn, will be able to verify user data quickly and easily at no additional cost. The decentralized nature of blockchain makes it an excellent technology for building transparent and at the same time reliable data management systems.

However, the success of your project largely depends on the quality of blockchain implementation. You need developers with extensive expertise to create a reliable digital identity management system on a blockchain that meets all the specifics of your business and government regulations. At IdeaSoft, we have been working with blockchain technology for over 5 years and we have our own experienced blockchain development team to create a software solution for you that meets all your requirements. Feel free to contact us for advice and a free project estimate.

How to Build a Cryptocurrency Exchange Platform

According to Fortune Business Insights, by 2032 the global blockchain market will reach $825.93 billion. So, it’s not surprising that cryptocurrencies have become a new way of investing. Probably, most market players, inspired by the success of Binance and Coinbase, have thought at least once about how to create their own cryptocurrency exchange.

At IdeaSoft, we have worked on Biteeu, a fully licensed and compliant virtual currency exchange. We worked on commission rates, 24/7 support, trading tech instruments, multiplatform support, and other features.

crypto exchange platform — *The preview of Biteeu UX*

Having experience in developing cryptocurrency exchange platforms, we decided to put together a detailed guide to help you create a quality software product. The case study included.

Want to build a solid crypto exchange? Don’t know where to start?

Read our article and find our about the main crypto exchange development aspects, essencial features and potential challenges you need to be aware of! Or let’s schedule a meeting and our specialists correctly draw up the requirements for your project.

Types of crypto exchanges
Key features of a crypto exchange platform
3.1 User authorization
3.2 Trading engine
3.3 User interface
3.4 Wallet
3.5 Order book and transaction history
3.6 Analytical tools for traders
3.7 Push notifications and alerts
What to look for when developing a cryptocurrency exchange platform
Cryptocurrency exchange platform development process
How IdeaSoft can help you build a crypto exchange platform (Biteeu case study)

Types of crypto exchanges

Before starting to build a cryptocurrency exchange platform, you should understand the types of crypto exchange platforms. There are several types of crypto exchanges:

Centralized exchanges. This is the most common type of exchange. Such exchanges have a centralized operator who is responsible for security, updates, and functionality. Centralized exchanges manage order books, which record all buy and sell orders. The weak point of this type is that coins are stored in the services themselves, which increases the likelihood of losing your funds due to hacker attacks. Therefore, centralized exchanges work hard to ensure the proper level of security.
Decentralized exchanges. Decentralized exchanges provide transfers of funds directly between users’ wallets. This reduces the potential for theft from exchange hacking since the exchange never actually stores cryptocurrency. However, you should keep in mind that in such exchanges, the lack of moderating third-party shifts all responsibility for errors and security to the users themselves.
Peer-to-peer exchanges. P2P exchanges provide the sale and purchase of cryptocurrency directly between users. Traders leave their orders as on a bulletin board, and other network participants can respond to the offers and agree on the terms of buy/sale.
Instant exchange. These exchanges are very easy to use. They allow users to instantly exchange one cryptocurrency for another. All you have to do is enter a trade order and it will be immediately executed. This is possible because instant exchanges provide access to the trading pairs of many different exchanges on one central service.

You can also find hybrid exchanges, these are ones that combine properties of centralized and decentralized exchanges to improve the quality of services. For example, an exchange might be managed by third-party operators while giving users more control over their funds.

Criteria	Centralized	Decentralized	P2P	Instant
Liquidity	High	Low	Low	Moderate
Security	Low	High	High	High
Coin holder	Exchange	User	User	User
Fiat availability	Yes	No	No	No
Project Examples	Binance, Bitfinex,Kraken	Etherdelta, IDEX,Tokenlon	Paxful,LocalBitcoins, Remitano	ShapeShift, Changelly, SimpleSwap

A brief comparison of crypto exchange types

Key features of a crypto exchange platform development

To create a cryptocurrency exchange, remember that an exchange is a complex platform and you need to think over its functionality well to build a good software product. Whether you want to provide trading of one cryptocurrency or many, you need to start with the core features that your platform should have. The structure of a crypto exchange usually consists of the following basic elements.

User authorization and verification

The user’s path to your exchange begins with authorization, so you need to provide a simple onboarding process. At the same time, users expect the members of this network to be trusted and with good intentions. Verification is important to ensure the transparency of transactions and to minimize the possibility of fraud.

Also, it confirms that cryptocurrency exchange complies with international standards. Enable anti-bot verification and two-factor authentication (2FA), ask users to verify their identity with their ID and photo. You need to eliminate any possibility of unauthorized access to accounts to ensure the safe storage of users’ data.

Of course, people are less willing to provide personal data for verification. It is your job to mitigate their concerns and show that you are not going to share information with third parties. Good UX/UI design can help you make the registration process consistent and user-friendly.

Trading engine

Trading engine is the core of your platform. It’s responsible for the functionality of your exchange. For example, here the system checks funds in user accounts, and the possibilities for a transaction, process information about prices and commissions, creates schedules, matches up the offers and bids, and the like.

To effectively manage their investments, users need to see real-time trading data, so you need to ensure good processing speed.

Engine development is one of the most difficult parts of developing a crypto platform. You will need a truly experienced blockchain development team to build an effective architecture and lay the correct logic for the exchange.

User interface

The user interface is how people see your exchange. The interface should be simple, clear, and user-friendly. By providing users with an enhanced trading experience, you can count on loyalty. Using the admin panel, a user should be able to place buy and sell orders, view the current order book, past transactions, balances, statistics, etc. Graphs and diagrams make information easier to read.

By creating a simple and intuitive interface, you can reduce the time to create and conduct transactions, ensuring the efficiency of your exchange.

Typically cryptocurrency exchanges use a type of chart called candlestick charts. Each candlestick in it shows rate change for the selected period, where green means an increase, and red means a fall.

Crypto exchange dashboard should provide quick access to features such as:

Creating and canceling orders
Market monitoring
View order history
Withdraw funds
Contacting support and more.

*Example of crypto exchange dashboard (Biteeu)*

Wallet

Wallets allow you to store and transfer your digital money. Usually, when registering, a user immediately receives a wallet. The e-wallets for digital currencies that you provide on your platform must enable secure transactions for withdrawing your virtual money and converting it to fiat currency. Think about how users can replenish their wallets and withdraw funds from them to a card or account.

For example, Coinbase allows you to connect a US bank account and easily transfer dollars to or from your wallet. There can be direct bank transfers in manual mode, or Visa or MasterCard services can be used in automatic mode.

One more thing. There are 2 types of wallets, cold and hot. A hot wallet is the main wallet that is used for crediting users’ funds to the balance and for withdrawing funds. A cold wallet is used as a backup since it is not connected to the Internet and so it is protected from fraud. To secure the exchange from hacking, it often transfers funds from a hot wallet to a cold wallet and vice versa. Decide if you want to provide your users with a cold wallet or just a hot one.

Order book and transaction history

Other essential features of good exchange are order book and transaction history. Exchanges group the actual buy and sell orders separately, and the formed list of open orders is called an order book.

When an order finds the offer that matches its conditions, an exchange automatically concludes a deal between users, and the executed orders disappear from the list. An order book allows users to navigate the current bids.

The list of completed trades or trade history contains key information about the transactions, such as the trade rate, its amount, and the exact time of the operation. History helps users track the performance of their activities. Building your crypto exchange don’t forget about these features.

Analytical tools for traders

The next feature that will help you attract advanced traders to your exchange is the internal analytical system. Analytical tools allow traders to get additional information about market trends and develop their game strategies. There are tons of technical indicators that traders use, so you should decide what indicators you want to implement in your crypto exchange platform.

For example, the Relative Strength Index (RSI) shows the strength of a trend and the likelihood of a trend change. This indicator measures the magnitude of recent price changes and displays the rate at which the price is changing. Moving Average (MA) is another important indicator that is based on past price data and helps traders identify trends by showing the average price over a selected period.

Also, popular indicators are Moving Average Convergence Divergence (MACD), which helps in predicting price fluctuations, Stochastic RSI (StochRSI) for identifying oversold and overbought zones, Bollinger Bands (BB), and others.

Push notifications and alerts

Push notifications will help you maintain communication with your users. Push notifications and alerts are convenient both for you and for traders because they will not miss important events. With the help of alerts, you can notify users about promotions, news, and special offers.

Traders, for example, can see notifications about price changes, trend changes, coin listing alerts, track exchange listings, and the like. But there is one point. Don’t forget to let users choose which notifications they want to enable. Alerts should be helpful, not annoying.

What to look for when developing a cryptocurrency exchange platform

When developing a crypto exchange, you should make sure that your platform meets some of the requirements and recommendations of Fintech regulation. This includes both regulatory compliance and security standards. So here is what you should pay special attention to when creating an exchange platform.

Security. We recommend you to use basic security methods, including 2FA, secure libraries and frameworks, manual administrator confirmation of large transactions, and cold wallets. If you have chosen a centralized exchange type, you will probably need administrators to manage it. Take care of the safety associated with this. Create roles so that each person has access to a small piece of the necessary information and doesn’t have access to the entire database. Especially important operations should require a confirmation from several admins. Other ways to ensure security are regular backups, validation of amounts, secure integration with external services (CRM, email, SMS, payment gateways), and more.
Regulatory сompliance. You may need a license, bank account. It all depends on the state in which you are going to register your exchange. If you want to work exclusively with cryptocurrency on blockchain, then regulation is not so important for you, but you should keep in mind that you will also receive any earnings in cryptocurrency. The best countries for registering cryptocurrency exchanges are those that have been working with cryptocurrency and blockchain for a long time. Among them are Estonia, Malta, Switzerland, Australia, Singapore. For example, Estonia became the first country in the world to implement blockchain at the state level. Read our Where to start implementing blockchain article to find out more about crypto and blockchain regulation around the world.
Liquidity management. Before crypto exchange development, you need to think over mechanisms to ensure liquidity. The third-party market makers option involves an agreement with providers who usually trade simultaneously in many different places and can provide the liquidity necessary for one site by entering into transactions on other sites. Cross-exchange market-making option allows you to contact a market maker, but this operator is the site operator, not a third-party. Liquidity mining option means that liquidity providers are rewarded for facilitating trade.

Adhering to these tips, you will build a cryptocurrency exchange that will outperform competitors.

Cryptocurrency exchange platform development: 6 key steps

After working through the business part, technical requirements, and choosing the type of exchange, you can start developing your crypto exchange. Make sure you work with a team of experienced developers who can provide you with successful case studies. Choosing an experienced provider will help you reduce development costs. The development process of a crypto exchange platform usually consists of the following stages.

Step #1: UX/UI design

If you want to create a cryptocurrency exchange, everything starts with UI/UX design. Based on your requirements and market research, a team of designers creates an effective user interface for your platform. Detailed visualization will allow you to prevent possible UX-related issues and make you see the logic of user interaction with the exchange.

Step #2: Front-end development

The front end is the implementation of the user interface design. At this stage, developers create a user-visible side of your exchange. The front end part is responsible for the look and feel of your platform which is very important for attracting and engaging users.

Step #3: Back-end development

The back-end part is responsible for the logic of your platform and all the necessary operations. A development team can use the product of a traditional trading exchange, optimized depending on the exchange incorporation geography. Then this framework is changed to suit your requirements and an individualized trading engine is created. The company can also use various APIs for additional integrations with third-party resources.

Step #4: Develop enhanced security features

At this stage of the development process, specialists implement various security features to make the platform reliable both for you and for future users. One of the most important security measures is an encrypted database and password-protected user access.

Step #5: Listing of the digital currency on the exchange

Having an idea of what cryptocurrencies you want to be listed on your exchange, the development team adds the necessary coins to the platform. After that, users will have the opportunity to buy and sell different types of cryptocurrencies.

Step #6: Launching the exchange

After all the tests and improvements, your crypto exchange platform is ready to go. There is a lot of work ahead to promote and support, but with a high-quality software product, these processes will be much easier.

The nature of blockchain technology and cryptocurrency trading makes them highly dependent on the quality of software development, so we advise you to take sufficient time to choose the right blockchain development partner.

Want to build a project?

Let’s talk and correctly draw up the requirements for your product!

How IdeaSoft can help you build a crypto exchange platform (Biteeu case study)

The IdeaSoft team has extensive experience in cryptocurrency exchange platform development. The IdeaSoft team has extensive experience in blockchain development. Over the past 5 years, we have developed dozens of blockchain-based solutions, including crypto exchange platforms. One of the latest projects is Biteeu. Let us tell you more about it.

The team had a task to develop a fully licensed and compliant cryptocurrency exchange within the European Union jurisdiction. Having studied the requirements, we selected the necessary tech stack and created a powerful and reliable platform for traders, including the following features:

Wallet with more than 50 virtual currencies and the ability to add new ones.
Security features – all data is stored on remote servers and protected 24/7.
Fully customizable TradingView chart with advanced trading tools.
Multilingual – the platform is available in several languages, including English, Russian, and Chinese.
Multiplatform support (Web, iOS, Android, Windows, macOS).
Mobile app based on the wide order book and fiat money integration.

The development of the project took about 12 months. The IdeaSoft team also created UX design for Biteeu.

Summary

Taking advantage of our full-cycle software development services, you don’t have to hire different teams to bring your idea to life. The internal expertise of IdeaSoft allows us to solve a wide range of tasks using company resources. We will help you with design, development, testing, and support.

If you are looking for a reliable development partner to build a crypto exchange platformor a socialfi platform, we look forward to cooperating. Drop us a message for a free project estimate or consultation with a technical specialist.

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Table of contents:

What is a DeFi aggregator?

Benefits of DeFi aggregators

DeFi aggregator development process

Discovery phase

UX/UI part

Smart contracts protocol development

Front-end development

Testing

Must-have DeFi aggregator features

Other features

IdeaSoft experience

Table of contents:

Required blockchain developer skills

Where to look for blockchain developers

Business directories

Freelance sites

Ukraine is one of the best countries to hire remote developers

Outstaffing or outsourcing: what to choose

How IdeaSoft can help you

Table of contents:

What is an Initial DEX offering (IDO)?

Differences between IDO, IEO, and ICO

The benefits of the IDO model

Open and fair fundraising

Immediate liquidity

Instant trading

Lower costs

Reliable transactions

How to launch an IDO?

How IdeaSoft can help you with Initial DEX Offering development

Table of contents:

What is DeFi and what are the benefits of DeFi

Benefits of decentralized finance

Starting a DeFi project

The process of developing DeFi product

DeFi security

Choosing a development team for a DeFi project

IdeaSoft experience

Table of contents:

What is DeFi

The current DeFi ecosystem

Decentralized crypto exchanges (DEX)

Lending/borrowing platforms

DeFi aggregators

DeFi payment solutions

DeFi insurance

How to get started with DeFi

Table of contents:

Once again, what are NFTs?

What is an NFT marketplace?

How does an NFT marketplace work?

NFT marketplace development: where to start

NFT marketplace features

Storefront

Searching for items

Filters

Creating listings

Status of listing

Buying and Auction

Wallet

Ratings

NFT marketplace development with OpenSea SDK

Custom NFT marketplace development

What to look for when building an NFT marketplace

Security

Experienced blockchain development team

How IdeaSoft can help you build an NFT marketplace

Table of Contents:

What is a non-fungible token (NFT)?

Non-fungible tokens have a number of specific characteristics, which include: