DeFi has already gained the status of a serious market for IT products, which is suitable for more than just venture investments. The time is ripe for creating your own DeFi projects right now. If you do not wish to delve into economic technicalities, mathematical formulas, the subtleties of smart contracts, development, and marketing, then you can benefit from the experience of OQTACORE. Our company has the appropriate expertise to support DeFi projects on any blockchain. We have a wide pool of specialists that can help bring any of your ideas to life. Right now, we are supporting several blockchain projects—FlyMining, FlyHodler, Bitcoin paper wallets, and TyrCoin.
The term DeFi unites a plethora of financial concepts in the field of blockchains, parachains, and sidechains. In addition to traditional financial concepts such as accounting, lending, centralized exchanges, etc., DeFi offers some unique tools such as DEX exchanges, AMA mechanism, liquidity pools, and non-custodial wallets. It would be a good idea to follow the DeFi industry to know which new products could blow up the market. We are not going to turn this article into a whole DeFi encyclopedia, since that information is readily available on the internet.
Instead of theory, we want to talk about practice. Say, you want to have your own DeFi startup and be the next multimillionaire, just like the creators of Rarible, OpenSea, Axie Infinity, and many, many more. What does one need to have their own DeFi startup? Let’s divide the practical aspect into nine parts:
- Traffic Sources
- Listing on CEX and DEX
- Liquidity Blocking
You need at least a shallow understanding of the terms listed above in order to be able to sensibly assess the work of your DeFi project team.
With rudimentary competence and a strong desire these can be done independently, however, it is always better to seek the help of specialists. You will need at least a blockchain developer, designer, UI programmer, financier, community manager, broker, marketer, analyst, and a lawyer. Our company has the experience and expertise of launching projects on the blockchain, and a strong base of the right professionals that will be made available to you.
Idea of a DeFi project
Any business starts with an idea. If you have already studied the DeFi market, you definitely have one. If not, analyze the market and find a suitable niche to launch your own blockchain project. You need to understand how you are different from your competitors and how to use it to your advantage.
Development of a DeFi project
Depending on the task, you may need programmers for C++, Node.JS, Python, Perl, etc. In addition to the programming itself, the developer must understand the concepts of autonomy, decentralization, fault tolerance, and scalability of distributed hash tables.
If smart contracts are created to implement your idea, your development team should be expanded significantly. The writing of smart contracts is a process that demands high responsibility from a person. Inasmuch as they’re recorded in blockchain, it’s impossible to hack them. In case of a developer’s mistake while coding, hackers can easily profit after release. There are different platforms for writing smart contracts—Ethereum, NEM, Hyperledger, and Stellar. The most common one is Ethereum. Functional smart contracts, a developed community, and high liquidity are what Ethereum boasts.
Decentralized virtual machine is one of the main features of Ethereum. With its help, you can run programs on Ethereum. This allows you to create a smart contract based on the platform’s template without any expert knowledge.
Although using Solidity to create an original smart contract is hard, errors made in smart contracts are a common reason for hacking. If you want to avoid problems, then you should take seriously the process of finding a good Solidity developer or pay a third-party company to do so.
Marketing of a DeFi project
You should think of your DeFi project as a business. The expense incurred will mostly be for its marketing. Without active advertising and promotion, your project won’t succeed. You’ll have to attract buyers and investors who are going to be the core of your blockchain project. They are going to be the first token possessors which will provide the primary trading volume. That’s how it works, and is the only way possible to create a strong community and profit from your project.
What does marketing in your DeFi project entail? It’s quite a broad concept. It includes the entire visual component of your project—the logo, the website with all of the documentation, token, Airdrop, etc.
The main reason why people participate in blockchain projects is obviously to earn money, whereas implementing their ideas comes after. Which means that users are looking for an opportunity to earn on the token of your project. The first thing people look at while choosing an investment project is its packaging, and your task is to make it an attractive one.
A logo is the icing on the cake of high-quality packaging. You’ll need a first-class logo that will reflect the essence of the project. This can be done independently with the help of Google and minimal Photoshop skills, or with the help of freelancers.
A website is the most basic description of your product—its face. Your website should be pleasant, modern, not overloaded with content, and meet industry standards. Search the internet for top blockchain projects and study their sites. Try to do something similar. You can also create a website with the help of a website builder, of which there are plenty of great ones.
A token is what most people participate in the project for. As was mentioned earlier, most of your users plan to earn on the growth of the token. In order to create a token, we recommend specifying the main purpose of the cryptocurrency—to generate income for community members, for charity, to solve environmental problems, and so on. It is not advisable to make a description of a token independently if it’s your first project. Read the descriptions on various aggregators and monitor services and do something similar. Although, of course, it is better to leave this kind of work to professional developers and economists and let them create a description of the token.
Airdrop is a free token distribution method. Usually, this marketing campaign is done at the beginning of the project, as it is aimed at exponential growth of the community. This is an average marketing campaign, and during this period, you give away part of the tokens from the general issue for free or in exchange for certain actions—retweets, subscriptions, comments, reviews, etc. It is recommended to allocate no more than 1-5% of the total token issue to Airdrop. To conduct an Airdrop, you can use special resources that provide full maintenance for Airdrop—create a bot, a branch on the bitcointalk forum, a telegram chat, and distribute tokens to Airdrop winners.
Airdrop can be carried out independently in manual mode if you believe that you can create the right bot yourself and track the investors’ actions.
Lobbying of a DeFi project
You definitely need a registered legal entity for a blockchain project. A legal entity should be registered in those countries where a suitable legal framework for cryptocurrency projects has already been developed. Many people choose Estonia or Singapore. In Estonia, for example, you can start a business fairly quickly and easily run it—the result of a very progressive jurisdiction in such areas as electronic residency and electronic notary. We strongly recommend you communicate with an experienced lawyer in this field and choose a country for the company’s registration according to the strategic goals of the project. In matters of lobbying and building partnerships with local governments, you will need lawyers, bank accounts, delegates in different countries, financiers, managers, and so on.
Community of a DeFi project
How to create a community within the project?
You should use popular social networks for your project and keep them active all the time. You should always keep followers engaged, writing posts, sharing plans, conducting surveys, and sweepstakes. A Telegram channel, Telegram chat, chatbot, Twitter, Discord are must-haves for a blockchain project. If you have the resources and the opportunity, you should get started on Reddit, Bitcointalk, YouTube, TikTok, Medium, Discord, etc. While making social network accounts, you should use the token name as the name of your groups and chats. For the description on social networks, you should upload the token logo and specify links to all your media resources. The first 100-200 subscribers could be bought to avoid your social networks looking deserted and unappealing to investors. It is not really necessary to have a larger number of fake followers, as it could backfire. A lot of people in the chat with zero activity will set off red flags and scare investors off.
A community manager will help you form a community. Nowadays, it is extremely difficult to find an adequate community manager who is not from Pakistan or India. Try using paid resources for hiring employees or agencies.
Traffic Sources of a DeFi project
You should promote your token among the target audience—solvent people who want to make money on your project and are ready to take risks. Why do investors take risks? In order to achieve their financial goals. Such investors enter the deal early and sell the token as soon as they fulfill their plan for “x”, which is as soon as they earn 200-10,000%. 90% of your investors will consist of such people. Don’t expect them to buy your token and keep it for long. This option is only possible if you constantly support and promote the project token.
Where to search for potential investors? Monitoring services. Investors are watching such resources in need of a token that will bring them billions. Use these aggregators, scroll through your project on them, create an attractive description, and use paid promotion within monitoring services. Thousands of people are subscribed to newsletters of these sites in order to buy a new token as soon as possible to earn money on it. These people are your potential investors.
Examples of monitoring services:
Use the power of the community. Motivate people to vote for your project on similar monitoring services. Do not skimp on using a small percentage of the advertising budget for promotion on these sites. Pay for the advertising on the monitoring sites, try third-party cheat services where people click on links and vote for your token for a small reward. It is not necessary to buy advertising on each service. Usually, investors use several monitoring services at once. Performing these steps will bring you loyal investors.
PreSale of a DeFi project
Commonly, blockchain projects start with a PreSale. This procedure tends to increase expenses and the project preparation time but helps to build the loyalty of potential investors. For the first few tokens, you can skip this procedure and start public bidding immediately through the “Fair Launch”.
Cryptocurrency PreSale is an early sale of tokens with a huge discount, carried out before the official start of sales. Usually, only a small amount of funds from the initially planned volume of investments is involved.
You can make your own ICO (Initial Coin Offering) contract or use a ready-made pre-sale service, for example DxSale. In case you decide to write an ICO contract yourself, you should specify the price, cryptocurrencies, and connect the smart contract to the PreSale form on your website. If you decide to use a qualified service, it’s not going to be an easy task. Study the details of interactions on the platform, find out about commissions—these will be your direct costs for PreSale. Remember that the price during the PreSale should be more profitable than the one during the official listing, otherwise, investors have no need to enter your project so early.
Listing on CEX and DEX of a DeFi project
Every serious blockchain project should be registered on DEX and CEX exchanges. While you need a CEX exchange listing mostly for status, the listing on DEX is one of the most important moments for public sale and full entrance of your project into the DeFi market. On a centralized exchange, you will have to undergo lots of validations on AML (Anti-Money Laundering) and KYC (Know Your Customer) systems. Not only is it an expensive process, but also a long one. It is recommended to list on centralized exchanges only if the TVL (Total Value Locked) of your project is more than a million dollars.
On the DEX exchange, you don’t need to go through any bureaucratic procedures. The listing begins with the creation of an LP (Liquidity Pool) token on Uniswap, dYdX, PancakeSwap, or AnySwap. In other words, it starts with the creation of liquidity for your token. Without liquidity, no one will be able to buy a token of your project. Liquidity is a pool of funds that you provide to investors to facilitate instant buying or selling of your token using AMM (Automated Market Maker) within this pool. Liquidity is produced through the combination of a new token (your token) with another token of set value, such as your token and BNB (Binance Coin). The more BNB you contribute to liquidity, the higher the initial selling price of your coin. You need to calculate an appropriate initial price for the token. Keep in mind that the AMM mechanism will dynamically determine the price of the token, depending on how much liquidity in two currencies is contained in the pool. You need to calculate the initial price yourself. Use the following formula:
The number of BNB / The amount of your tokens = The price of your token in BNB
Liquidity Blocking of a DeFi project
As soon as investors start to buy tokens of your project from the LP on the DEX exchange, the amount of BNB in the pool will keep increasing. Your token can only be bought with the BNB, because your token and the BNB token get tied together in the pool. Investors are always worried that your project will get scammed, that you will withdraw all BNB from the LP and devalue the project token and all their investments.
Lock liquidity in the LP by renouncing ownership of LP tokens for a fixed period of time by sending them to a smart contract with a temporary lock. Locking liquidity gives investors confidence in the legitimacy of your DeFi project. It gives them peace of mind and makes it clear to them that you won’t be able to take the liquidity for yourself and leave them without money.
You must lock 80-100% of your liquidity in the LP, otherwise, token scanners will start marking your token as an unreliable investment. Use paid resources to lock liquidity, which should be easy to find on the internet, or try services like DxSale, Unicrypt, DeepLock, etc.
How can one withdraw unlocked liquidity after the time-lock has passed?
We recommend not withdrawing liquidity at all, otherwise, your investors will see that you withdrew their funds and will stop investing in your token. Earn on the part of the tokens that you left for the team, in other words, for yourself. Usually, developers indicate that 1-5% of the total issue of project tokens is sent to the team for further project development.
It is definitely up to you to decide if you wish to go through all the stages of development, marketing, and project support all on your own, or involve a professional team like OQTACORE with strong experience and background in blockchain development. Although no successful project can be complete without investments, if you can’t quickly, professionally, and efficiently implement your idea into a final product for consumer use, no one will ever know about its existence.