How to Build Your Own DEFI Token?
Particulars of DeFi projects
Decentralized finance (also known as DeFi) is a type of financial service that does not rely on centralized governing bodies (such as a board of directors or a director) or centralized intermediaries (states, central banks, banks). Instead, it employs decentralized forms of government and validation, which are executed via blockchain and smart contract technologies.
Bitcoin, a cryptocurrency payment system that provides an alternative to traditional fiat currencies, is the most visible example of DeFi. Bitcoin lacks both a central regulatory authority and a primary validator. Its functions are either automatic or democratically determined.
Another example is the Compound project, which allows Defi to lend its bitcoin to other users (with remuneration in a form of a percentage). This blockchain platform employs smart contracts, which are written in open-source software, to bring together lenders and borrowers based on particular criteria. Furthermore, these smart contracts automatically modify interest rates based on market conditions.
The following are common characteristics of Bitcoin, Compound, and other DeFi:
Decentralization. The main aspect of all DeFi initiatives implies that the project will be managed by users or a group of managers nominated by a vote of network members. Aside from that, smart contracts may be used to decentralize specific functions, such as coin emission or destruction in Sögur.
Open-source. Open-source software products are transparent, which makes them more reputable because you can see exactly how they work. Furthermore, if you don't agree with the majority's development plan for an open-source project, you can edit the code and establish your own "legitimate" project (token, app, service).
Process automation. In Bitcoin, elements such as currency issuance, transaction validation, a blockchain record of transaction history, and many other functions are allocated to the system itself, making it automated. Smart contracts, which can automate all generic procedures such as loan giving, interest payments, invoice filling, customs clearance, and so on, have taken Ethereum to a new level.
Maximum inclusiveness. The majority of DeFi services are cross-border, and there are no entry (use) obstacles — anyone can use bitcoin. The Compound lends to everyone, from a Congolese farmer to a venture capitalist in the United Arab Emirates.
Business idea and mission of the project
Idea for a business. If you only want to create a DeFi token, you'll be creating another decentralized cryptocurrency that no one needs because Bitcoin and other coins already exist. To be in demand, the token must have some worth - a value proposition. This value might be anything, from a very low transaction to an improvement in the global environmental condition (many people blame Bitcoin with its PoW protocol for not being environmentally friendly).
Otherwise, you'll have to start a financial service that uses your DeFi token. Only such a project has a possibility of being successful. In this instance, recreating classic financial products in a decentralized architecture is the best solution. They usually include services like money transfer and payment – cryptocurrency, buying and selling, and so forth.
Insurance (InsurAce), derivatives (Opyn), asset management (Balancer), rewards points for purchases (Fold), and interest-bearing deposit opening (Celsius Network) are among the newer start-ups that have emerged in recent years. Then, through decentralized variants of other standard financial services, the DeFi service sector began to grow.
When launching your DeFi token, you should choose a financial instrument that has not yet been integrated in DeFi. That's how you'll be able to become a natural monopolist and gain the most benefits and advantages right away. Based on the following criteria, you should select a financial instrument for your blockchain project:
There is enough demand. It all comes down to the client's desire for a traditional financial instrument that is sufficient to pay project development costs while also being lucrative in the long run.
Dissatisfaction among users. It should, in an ideal scenario, be linked to the financial instrument's centralization. For example, Venezuelans are unsatisfied with their national currency as a result of hyperinflation, while bank consumers are upset with banks as a result of data breaches, expensive commissions, high-interest loans, or excessive bureaucracy.
There will be very little competition. Because the decentralized finance sector is still in its infancy, there are still unfilled or nearly empty niches. The launch of your project in this area is easier because the standards for software quality and marketing costs are lower.
Cost-effective. The creation of a simple cryptocurrency DeFi token is reasonably straightforward and inexpensive, making it accessible to a wide range of people. The development of a decentralized cryptocurrency exchange, credit market, or insurance business, on the other hand, will involve a significant amount of time, money, and effort, and will be limited to companies with a substantial budget and effective management.
Here's how you find a technical partner like this:
LinkedIn, Clutch.co, Appfutura, Goodfirms.co, Adnify, Extract.co, Contractiq, The Software Network, They Make Apps, CrunchBase are some of the sites to check out.
Who to search for: a firm that specializes in blockchain and has extensive experience developing financial market apps.
How to check: look through a portfolio, try out the candidate's products, and read reviews on Goodfirms.co, Clutch.co, and other similar sites to see what people are saying about the developer.
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