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02 December 2021

How to Create a DeFi Exchange?

Are you looking to do the DeFi exchange?
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We’ll tell you briefly and in lay terms about what DeFi exchanges are, why users like them, how to launch your DeFi exchange, and how much it costs.

DeFi exchange are another rapidly growing trend in the cryptocurrency world, which gained momentum in 2020. Specifically, on only one platform — 1inch — daily transaction volume has grown from averaging $1 million in daily volume in July 2020, to over $40 million a day, in January 2021. Other DeFi aggregators such as Matcha, Zapper.fi, and Zerion.io improved their performance significantly as well. It points to a great interest in such projects, which you can use to launch your own DeFi exchange. Later, we’ll tell you how to do it and how much the development of such software costs.

What is a DeFi exchange?


Decentralized finance or DeFi is financial instruments in the form of services and apps, which are managed not by centralized companies, banks, or regulators, but by decentralized blockchain protocols. In 2020, these projects became the main growth driver of the cryptocurrency market because, unlike traditional financial instruments and services, DeFi has no problem with accessibility, transparency, and data confidentiality assurance.

However, decentralized finance has serious problems with UX / UI: most DeFi services have a complex user interface and many specific terms, which complicates working with them and pushes beginners away. Besides, at this stage, the DeFi applications are fragmented and it is quite difficult for users to keep an eye on the market.

DeFi exchanges are intended to resolve both problems. These services gather information from various DeFi protocols and integrate them into a single interface, which is simple and intuitive. This allows users to monitor the condition of many markets and make smarter decisions due to only one tool.

Besides, exchanges perform other functions such as connecting liquidity pools, reducing transaction costs, earnings on staking, participation in lotteries, buying and selling NFT, the launch of IDO/IFO, and many more.

Here are some examples of DeFi exchanges on the market:

Benefits of DeFi exchanges

Before you start creating DeFi exchanges, you should find out what users and decentralized service providers need them for. So you can understand what features you better implement in your project.

Why do the end-users of DeFi need exchanges?



Why do decentralized finance providers need exchanges?



DeFi exchange functionality


Must-have features. At the next stage of the development of your own DeFi exchange, you need to choose what features to implement primarily and what features can be added along the way of the platform development. Here is a list of features, which you should think about above all:

Here are several examples of the opportunities that existing platforms offer:

Aside from implementing these and other advanced features, consider the availability of your DeFi exchange on mobile devices. According to statistics, most users prefer to interact with applications using a smartphone, the younger the user is, the stronger this desire is. By implementing it, you increase the reach and engagement of users.

DeFi exchange development stages


DeFi is sophisticated software with the highest requirements for code quality and security because it’s created based on open source and uses not only its users’ data but also their money. So if you want to launch your own DeFi exchange , you should entrust this task to a technical partner with extensive experience in the development of similar apps such as Merehead development company.

Our team has been developing blockchain-, fintech- and DeFi projects since 2015 – from smart contracts to decentralized crypto exchanges. You can see our portfolio and find out cooperation conditions via sales@merehead.com, on this phone number +1-206-785-16-88, or via a feedback form.

Project discovery phase


At this step, you and the development company should determine the goals and requirements, which will allow creating a software product that meets the needs and expectations of end-users. To do so, you need to study your target audience, competitors, and market condition, thereafter you’ll need to develop the design requirements and technical specifications as well as develop a detailed plan for the creation of a DeFi exchange.

Development of the design requirements usually implies the creation of:

When developing technical requirements for the exchange, your team has to strike a happy medium among your business needs, user needs, and technical capabilities of the modern technologies.

The result of all this has to be the following things:

UX/UI design development


DeFi exchanges emerged with the motto of improving user experience by providing a crypto community with a single, simple, and convenient interface for working with different DeFi protocols. So when developing your own project, you need to create an interface that really makes it easier for users to interact with DeFi protocols. 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 convenient and user-friendly interface that your potential users will love. Its development usually includes the following stages:

Smart contracts development


In all DeFi platforms, most of the back-end part is embedded in smart contracts. They’re the ones responsible for the implementation of the main features whether it be the token exchange or crypto-lending. To develop the smart contracts of your exchange, you’ll have to think about their logic and algorithms in advance.

For example, 1inch has a unique algorithm that allows users to exchange tokens 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 monetization of your exchange. Usually, DeFi exchanges earn commissions from users and/or partners.

Front-end development of an exchange


Front-end is also a very important part of the DeFi exchange, as this is the part that users interact with directly. Therefore, whether the users will like your exchange or not depends on it. To create front-end, which they will definitely like, you need experienced developers and a correct tech stack, which will allow implementing all of their ideas.

Here is an example of a tech stack for the creation of a DeFi exchange:


Product testing


Testing is crucial for the DeFi exchange development as it allows making sure that all features of the created product work as intended. Besides, testing helps to identify system vulnerabilities and remove them before hackers take advantage of them: according to Block Research, in 2020 there were 15 hacks of DeFi platforms amounting to $120 million funds being stolen, which became possible due to errors in smart contracts.

Testing and bug fixes reduce future risks of similar attacks significantly, especially if independent auditors such as CertiK and Slowmist conduct the testing. Besides, in the case of positive assessment, their reports help a DeFi protocol to be more credible.
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