Today, the use of blockchain technology has revolutionized financial services. Financial institutions, which are providers of banking services, have moved from traditional methods to new innovative solutions such as Decentralized financing (DeFi). With the help of emerging technologies, DeFi allows people to conduct financial transactions.
Suppose you are someone sitting in any corner of the world with a stable internet connection; you can borrow or trade through software that stores and verifies financial actions in distributed financial databases. A distributed database collects and aggregates data from all users and can be accessed across various locations. It uses a consensus mechanism to verify financial actions.
Concerning the increase in the popularity of the DeFi lending platforms among the fintech firms, there are several entrepreneurs who want to develop such outlets for their businesses.
In this article, we will discuss a few steps one can follow to develop a DeFi lending platform;
Discovery phase:
The most essential and initial step of building a DeFi application is its discovery phase when you develop your project's business logic.
You should know who we are creating this project for, the target audience, and their needs. Each project is a separate business case that needs a custom solution. In order to be technically correct, developers should build a lending platform architecture that would meet their business goals and be appropriate to the needs of end-users.
During the discovery phase, you need to identify and describe the main tasks of your project along with core features and develop a portrait of your potential users. Statistics show that the discovery phase optimizes the budget and reduces project risks.
UX/UI design:
The second step is UX/ UI design. UX is usually considered one of the weak points of DeFi applications and is the reason why users prefer centralized platforms. You should ensure that everything looks simple on your app for users. Thus, working with experienced UX/ UI design is better, as this will help you assemble your requirements into a single functional and intuitive user interface.
You can pick development companies having an in-house design department. It is also recommended that the future DeFi platform is adaptable enough to host additional features that might be added later.
For instance, the Aave lending platform had to redo its complete UX when elevating its protocol to version 2 to adjust a score of new features.
Verifying the UX/UI with dapp developers is also important to check if it is technically viable and would not require any extra effort.
DeFi lending protocol development:
As we know, to create a blockchain-based lending platform, it is suggested to put the entire logic of the platform's operation into smart contracts. Smart contracts are transaction protocols that execute automatically once all the conditions laid down in them are met. Once you have set the requirements for the project, the method for calculating interest rates, the credit pool type, the process for investing rewards, etc., all these features should be executed technically as code.
Smart contracts should be secure and free of bugs or vulnerabilities in the code.
Crypto Wallets:
Another vital aspect is identifying which crypto wallets will be supported by our lending services platform: the more, the better. However, we should also consider our audience's preferences.
The bare minimum can be MetaMask, CoinBase Wallet, and Ledger or Trezor. Our choice will largely depend on which blockchain we run on and who we target.
We can also create a unique crypto wallet for our lending platform.
Testing and launching:
The final step is to test the functionality of our platform. DeFi is an open system that requires further security requirements. When you are testing your lending app, you should ensure that not only is the system working as intended, but it is also free of vulnerabilities. The main task here is to audit smart contracts. Past precedents show that DeFi protocols have been one of the favorite targets of hackers. Remember that providing full-cover security is important to earn the trust of users.
When all this is done, the blockchain development team will position smart contracts to the chain and switch the front end (web/mobile apps) to a production environment — and it is live!
Usually, the cost of developing a DeFi lending platform starts at almost $120,000. However, the total budget will depend upon core features and integrations.There are still many more interesting things like Nfts tokens list
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