How To Create A DeFi App From Scratch: A 5-Stage Guide With Real Examples!

If you’ve always wanted to build a decentralized application, this concise guide is your key to unlocking the secrets of building your dream project. 

From ideation to marketing, this piece is an attempt to equip you with the essential insights and practical strategies you need to thrive. 

Discover how to create a DeFi app that captivates attention, drives innovation, and solves real problems in this rapidly evolving ecosystem. Get ready to embark on a transformative journey into the world of DeFi. 

Let’s go!

How to Create a DeFI App: The 5-Stage Process

In the rest of this article, we divide building a decentralized application into a 5-stage process. Here goes:

Stage 1: Conceptualizing your Decentralized Application

Your first step on how to build a decentralized app has to start with an idea. Typically, we assume you already have an idea for a Decentralized app if you’re reading this piece. But if you’re just an enthusiast who doesn’t know what to build, here’s how to develop a decentralized application idea. 

1. Know the DeFi space

The very first step is to have a good knowledge of the DeFi space. Without this, you have no business solving a DeFi problem. 

So, read DeFi content. Catch up on the news. Follow DeFi influencers on social media. Watch videos. Take courses, if you must. Start with simple topics, like “What is DeFI?” and gradually make your way to more complex concepts. 

Our Vezgo blog offers much information on topics around the crypto and DeFi niche. 

2. Identify problems and shortcomings. 

What you want to create is a solution, so you need a problem to solve. If you can’t immediately think of one problem, follow online crypto forums like Reddit and Quora. Read news about the DeFi space from reputable crypto news platforms like CoinTelegraph or Coingecko. Communicate with other enthusiasts. See what their problems are and if you can solve them. 

3. Check that the problem hasn’t already been solved.

After identifying a potential hole to plug, check to see that that problem hasn’t been solved. This way, you don’t waste time trying to reinvent the wheel.

Don’t get discouraged, though, If it has been solved. New ideas only come once in a while. But you can make your DeFi product an improvement on others’ solutions to make them more efficient, faster, or cheaper. 

Also, if you think a problem has been solved as best as possible, but there aren’t many solution providers, you can join the bandwagon. One of the first exchanges ever was Mt. Gox. Today, we have Binance, Coinbase, Kraken, and over 200 more. And what’s the goal behind all of them? To facilitate the exchange of cryptocurrencies. 

Key Takeaway: If it hasn’t been solved before, solve it. If it has been solved before, make the solution better. If the solution is already the best, join them to build your own version.

4. Design your unique value proposition.

This is the stage where you brainstorm on values that’ll separate your app from others. Otherwise, you would get lost in the crowd.

5. Identify your target audience.

Now, you have a product idea. Your idea has a unique value proposition that differentiates it from other apps. All you need now is who to sell it to and how to sell it to them.

Your target audience could be any group of people as long as they need your solution. 

At Vezgo, for instance, the target audiences are developers and companies building DeFi portfolio tracking solutions or tax & accounting software. Wealthica, on the other hand, is for individuals who want to track their financial portfolios. The same portfolio tracking problem, but different audiences!

6. Develop a business plan.

Your business plan will contain everything you’ve brainstormed in the steps up above. It’ll also include a little more, like results from your market research, where your decentralized application should be in a few years, scaling plans, marketing strategies, and more.

Key Takeaway: Understanding the problem you want to solve, coming up with a solution, and knowing how best to deliver your solution to your audience. These are the first hurdles you must cross when building your decentralized app.

Stage 2: Developing a Decentralized Application

Welcome. This is where things get a little technical, and the failure or success of your DeFi app will depend on this stage. 

The entire development process of any decentralized app often goes through three processes:

• Design Process
• Development Process
• Security Process

Here’s what each entails:

The Design Process

This is usually the next step after the conceptualizing stage up there. This is where you determine how users will interact with your DeFi application. 

The design process of your development stage is more important than you may initially think. For instance, does it take three steps to complete a task on your app but just one step to do the same on your competitor’s app? Do your users need to suffer through a manual to perform simple tasks on your application? Do you have a user-friendly interface?

Functionality is another problem your design process must solve. Your application must contain all the features users need to achieve their aim without having to do too much.

All of these little things are what determine if your decentralized application appeals to your users. Fortunately, you don’t have to answer these questions yourself. You need a professional UI/UX design team. Experienced UI/UX developers will create intuitive and visually appealing user interfaces that make your app easy to understand and use. 

Development Process

The development process of your DApp is another crucial stage you must handle with the utmost care.

Without further ado, here’s a list of things to consider when developing your application:

1. Consider your methodology

Your methodology involves how your development team would go about building the application. And there are many options to choose from.

For instance, the Waterfall model takes a serial approach to application development, such that one department has to finish its tasks before the next starts with theirs. The front-end developers, for example, would have to complete their part before handing it over to the back-end developers. 

While that seems orderly enough, it could waste time and resources. If the frontend developers encountered a problem that took longer to solve, it would delay the entire process.

We recommend you use the Agile methodology because it involves breaking the project into small achievable sub-tasks or key features. These smaller features are then constantly tested as they’re being developed.

For instance, the front-end developers may first build the home page and test it to see if it works. If everything looks good, they’ll hand that section over to the backend and move on to the next feature.

As you can see, it’s a constant iteration of development and testing for each small feature until the entire system is built. But make sure to keep your development team in the loop. They’ll be the ones building the project, after all.

2. Consider your blockchain network.

The DeFi sector lives on blockchain technology. That is what gives it its decentralization attribute. And because there are so many blockchains, choosing one that would be best for your project is essential.

But why is your choice of blockchain network important? Because your choice of blockchain technology will:

• Affect the interoperability of your application with other applications and platforms.
• Affect what it costs to develop, manage, and scale your application.
• Determine the overall performance of your decentralized app as far as speed, scalability, security, and complexity are concerned.

Developing smart contracts is often an integral part of many decentralized applications. Sometimes, a smart contract is what contains the business logic. So, if you fail at everything else, it shouldn’t be your business logic. Examples of blockchains that accommodate smart contracts are Ethereum, Hyperledger Fabric, Binance Smart Chain, EOS, Polkadot, Corda, Stellar, Avalanche, and Rootstock.

Of those blockchains, the Ethereum network is the most commonly used by far.

3. Consider your tech stack.

Your tech stack plays a massive role in how effective and efficient your application will be.

Because you would likely be building a smart contract, which would probably be on the Ethereum network, you may need Solidity programming language.  

Solidity is a programming language geared towards the development of smart contracts, and that is why many developers prefer it for such purposes.

For the rest of your application, you can use the best tech stack that suits your project. You do have to consider your infrastructure, though. Are you going through the mobile apps route or the web application route? What cloud infrastructure are you relying on? Or would you use a private central server?

4. Consider potential integrations with other Decentralized Applications.

Your DeFi application will hardly exist on its own without having to integrate with other decentralized applications. And that is why you must identify all the integrations you need early in the development stage. 

Suppose you were working on a crypto tax and accounting software that helps users calculate their crypto taxes. You would need a way to access the financial holdings of your clients across various platforms. Say, an API. 

Having identified this need, you could build this feature into your app on your own. Or you could contact companies that help aggregate crypto portfolio data. 

Building it yourself would give you complete control over your clients’ data, which can be a good thing. However, it could add hours to your development time. It could also take your attention away from your core business logic, which is to offer crypto tax calculations. 

If, on the other hand, you outsourced this part to a Web3 portfolio data aggregation API like Vezgo, you would be saving your business tons of hours and resources. And since Vezgo is always busy working on its project, just as you’ll be on yours, you can be sure that your project will be optimized for the best service.

PS: Contacting the API provider as early as possible during your project development is essential. Doing this helps you keep to your project timeline. 

5. Consider Tokenomics

Not all DeFi applications need a public token. But if yours does, your token would have to be tight. 

Tokenomics is a cross between “token” and “economics.” It describes the utility of your token, how it’ll be supplied, its distribution strategy, and how you intend to manage its supply and demand. It should also capture incentives for potential investors.

Getting your tokenomics right is crucial because it is a way to show your investors and stakeholders whether your decentralized app is worth investing in.

Key Takeaway: There are five main things you need to consider when creating dApps. You should consider your development methodology, blockchain network, tech stack, integrations with other decentralized apps, and tokenomics if you’re going to use a token.

Security Process

DeFi platforms are targets for cyber attacks. And adhering to industry-standard frameworks and security best practices will keep your application safe and worthy of trust.

As much as possible, conduct comprehensive code reviews. Implement rigorous testing procedures. Engage in regular security audits and assessments to identify and address potential vulnerabilities.

Carry out consistent smart contract testing to ensure that your logic remains tight and foolproof. If there’s a vulnerability in your smart contract logic, you want to be the first to know about it. If a dubious entity found this before you, they could exploit it and cause loads of trouble for your decentralized application.

Don’t forget! Consult cyber security experts! They’re in the best position to guide you through this process when creating decentralized applications.

Stage 3: Marketing Your Decentralized Application

Recognizing the pivotal role that marketing plays in the success of your decentralized application is the crucial first step in marketing it. A well-executed marketing strategy can increase awareness, drive user adoption, and foster a strong community around your project.

1. Craft your brand identity.

To set your DeFi project apart in a crowded market, you first need to develop a compelling brand identity. This entails—but isn’t limited to—crafting a unique value proposition, designing a memorable logo, and establishing a consistent visual language. 

You should also build a professional website or landing page showcasing your project’s features, team, and achievements to potential users or investors.

2. Double down on social media.

Harnessing the power of social media platforms, influencers, and communities is paramount to amplifying your reach and engaging with your target audience. It is almost impossible to avoid marketing your DApp on social media. 

Identify relevant platforms and influencers within the DeFi community and establish meaningful partnerships. Additionally, participate actively in relevant online communities, forums, and Telegram groups to foster discussions and attract early adopters.

3. Create content around your application.

Informative blog posts, tutorials, and educational content showcase your DeFi project’s value. These things are crucial to the marketing of your application. Leveraging email marketing, targeted ads, and referral programs also help attract and retain users and investors.

Stage 4: Navigating Regulatory Landscapes

After so long, regulations are finally catching up with the DeFi ecosystem, albeit with much friction. However, we expect that in a few years, blockchain technologies and regulations will work better together than against one another.

But for the sake of your DeFi application, these tips should help you navigate the regulatory landscape. 

1. Stay up to date on regulatory updates.

It is essential to stay updated on this evolving legal landscape and understand the compliance considerations relevant to your jurisdiction. This knowledge will help you make informed decisions and mitigate regulatory risks.

2. Consult legal experts

Seek the guidance of legal experts specializing in blockchain and cryptocurrency regulations. They can provide valuable insights and assist you in navigating the legal intricacies specific to your project. Engaging legal counsel will also help you ensure compliance with applicable laws and regulations.

3. Secure licenses and permits where necessary

Different jurisdictions may have specific regulations and licensing frameworks for operating in the blockchain and financial sectors. Understand and fulfill these requirements to operate within the bounds of the law.

4. Collaborate with other solution providers.

Actively engage with industry associations and participate in regulatory discussions to stay informed about regulatory developments. Collaborating with like-minded individuals and organizations can provide valuable insights into compliance best practices and help shape the regulatory landscape positively.

Stage 5: Building and Engaging the DeFi Community

In addition to building your decentralized application, you could also build a community around your project. The referrals you’ll get through this community will outweigh anything you would get from ads. 

Create channels for community interaction, such as forums, Discord, Telegram, or dedicated social media groups. Encourage open dialogue, address community concerns, and provide timely support. Foster a sense of belonging and collaboration to establish a strong community foundation.

Harness the power of your community by involving them in your marketing efforts. Encourage community members to become advocates and ambassadors, organically spreading the word about your decentralized application. Embrace user-generated content, referrals, and community contests to amplify your reach.

Listen attentively to your community’s feedback and suggestions. Actively incorporate user insights into your project’s development roadmap. Regularly communicate updates and improvements to showcase your commitment to a user-centric approach. This builds trust and loyalty within the community.

Motivate community participation by offering incentives and rewards. Design tokenomics that align with community engagement, such as staking, yield farming, or governance mechanisms. Empower community members to actively participate in decision-making processes through governance models employed by a Decentralized Autonomous Organization (DAO).

Vezgo: The API Integration You Can’t Do Without…

Especially if you must aggregate your users’ crypto portfolio data across various platforms. 

Remember that no DeFi project exists on its own. It has to have crucial integrations with others. This is crucial because it helps you free the space, time, and resources to concentrate on the core of your project. 

And this is where Vezgo comes in.

Vezgo’s API allows you to integrate with and extract users’ crypto portfolio data from over 300 wallets, exchanges (DEX and CEX), NFTs, and blockchains. Even better, you only need one API for all of these integrations!

This Vezgo API integration not only saves you a lot of development time but also exposes you to many platforms with just one API.

What You Can Do With Vezgo API

Over 100 DeFi solution providers already rely on Vezgo for their crypto portfolio API integrations. Some of these applications include:

• Taxes and Accounting thanks to the best xPub and internal transactions support
• Lending and Auth
• Digital banking
• Crypto Insurance
• Wealth management
• Financial dashboards, and so many more.

Benefits of Relying on Vezgo API Integrations For Your Decentralized App

Vezgo’s benefits for your project are immense, especially if you need your users’ crypto portfolio data. Here are some of those benefits:

1. Faster development time

Vezgo cuts your development time by at least 80%. Why? Because it can be a headache trying to connect with an exchange, wallet, or blockchain one after the other. But Vezgo does this for you, extracting all the data you need with just one API.

2. Limitless scaling

Are you building the core of your business and securing new partnerships? You worry about that.

But aggregating transactions, holdings, and even deposit and withdrawal data from most exchanges, wallets, or blockchains, and as securely as possible? Let’s worry about that.

And because we’re constantly updating our API with as many platforms and transaction types into our integrations, you can be sure that when you’re ready to scale, we won’t be holding you back. 

3. Top-quality encryption and security

Vezgo is as secure as can be. First, we employ AES-256 bank-level encryption that makes your users’ data extremely safe. Also, all data in transit is encrypted using the TLS 1.2 cryptographic protocol, one of the latest and most secure.

Finally, data in our database is encrypted and our database administrators don’t have access to the encryption keys. So you can be sure that security and data integrity are a big deal for us as much as they are for you.

With these, it isn’t surprising that Vezgo has already aggregated over $28 billion without any data compromise.

4. Easy to integrate

With Vezgo, you don’t need an API for each exchange, wallet, or whatever platform you’re extracting data from. You only need one API. And with that single API, you can access our entire portfolio of crypto platforms and accounts.

Also, all the data we ship are cleaned and standardized, and they come ready to use. This makes development easy and reduces your exposure to unnecessary bugs.

5. A diversified bouquet of accessibles

Vezgo doesn’t just gather account holdings. It also imports data histories from margin trades, spot trades, deposits, withdrawals, reward and dividend earnings, open and closed trade orders, etc. 

The best part is that internal transactions, which are notorious for being almost untrackable, are only child’s play for our API. We also added support for NFTs on all EVM-Based chains.

6. Community

You won’t be alone with Vezgo. With over 100 companies already using Vezgo, you have a community of solution providers like yourself you can associate with. This community can foster partnerships and opportunities for you and your business.

7. Developer Support

Concise and clear documentation accompanies the Vezgo API. And with this, your developers will have no issues using our API. But if the need arises, you can contact us via our website. We always have experts on hand to help you out.

Use Vezgo API in Your Decentralized Apps Today

Save yourself and your development team time, resources, and effort. When you need to create a decentralized app, let Vezgo API as the backbone of your portfolio data aggregation today.

Reach out to us through mail at hello@vezgo.com to discuss your decentralized applications or sign up to get your API Keys. We’re waiting for you! API Docs is here.