How to Make a DeFi Token?
How to Make a DeFi Token?
In this article, we’ll consider key points that will help you with the creation of your own DeFi token: what it is, how it works, what types there are, who develops them and how. We’ll also specify the cost of the project development.
Decentralized finance (commonly referred to as DeFi) is a sort of financial services, which doesn’t rely on centralized governing bodies (a director, a board of directors) or centralized intermediaries (states, central banks, banks). Instead, it utilizes decentralized forms of government and validation, which are being implemented with the help of blockchain technologies and smart contracts.
The most obvious example of DeFi is a cryptocurrency payment system Bitcoin, which is an alternative to traditional fiat currencies. Bitcoin doesn’t have either a central governing body or the main validator. Its functions are either automated or decided on democratically.
Another example is the Compound project, which allows lending other users its cryptocurrency (with remuneration in a form of a percentage). This blockchain platform uses smart contracts to collate lenders and borrowers at certain criteria that are written in open-source software. Besides, these smart contracts automatically adjust interest rates depending on the current market situation.
The following things are common among Bitcoin, Compound, and other DeFi:
Business idea. If you want just to make a DeFi token, then it will be another decentralized cryptocurrency that nobody needs because there already are Bitcoin and other coins. The token should have some value – value proposition – to be in demand. Anything can be this value – from a very cheap transaction to improvement of the world environmental situation (many people blame Bitcoin with its PoW protocol for not being environmentally friendly).
Otherwise speaking, you need to launch a financial service that would use your DeFi token. Only such a project will have a chance of succeeding. The best option, in this case, is to recreate traditional financial instruments in a decentralized architecture. They usually implement such features as funds transfer and payment – cryptocurrencies, buying and selling various tokens – cryptocurrency exchanges, token loan – credit P2P markets.
Start-ups related to insurance (InsurAce), derivatives (Opyn), asset management (Balancer), rewards points for purchases (Fold), and interest-bearing deposit opening (Celsius Network) have been emerging in recent years. Then the DeFi service market continued to expand through decentralized variations of other traditional financial services.
You better choose a financial instrument, which had not yet been implemented in DeFi, when launching your DeFi token. That’s how you’ll be able to become a natural monopolist and get maximum advantages and benefit at the start. You should choose a financial instrument for your blockchain project based on these criteria:
Blockchain platforms to launch tokens on:
Here’s how to find such a technical partner:
In addition, depending on the niche, you’ll need the integration with other services as well. For instance, trading platforms, service providers, and payment gateways if the made DeFi token will be a payment instrument. Or the integration with the marketing tools if your project will be related to advertising. Besides, the integration with Facebook, Instagram, Twitter, LinkedIn, and other social media is desirable to improve the user experience.
A particular set depends on the niche, location, target audience, and budget because each integration costs money. Money is spent on either coding or access to services; for example, to the base of real estate that is for sale.