Imagine a completely automated platform that promises to make payments immensely accessible to anyone around the world, irrespective of geographical restrictions. Decentralized Finance takes this promise a step ahead. With just a smartphone and an Internet connection, you can perform any financial activity using DeFi with more efficiency and security than the conventional methods.
The DeFi market is expanding at an exponential rate, optimizing our financial activities with an added touch of security and transparency.
However, it is a commonly known fact that fast growth is always followed by a hard fall. What this necessarily means is that during the growth, many things are neglected that eventually come back to turn things around.
For the DeFi space, this crucial factor lies in the coding practices.
The need for following best practices in DeFi
DeFi essentially is just a few lines of codes that manage everything. These lines of code are written in a smart contract, deployed on a Blockchain network, and then connected with your regular frontend and backend to provide a platform where users can reap its benefits.
Here, Smart contracts are simply programs that run on the Blockchain and can automatically execute certain actions when the predefined conditions are fulfilled. Smart contracts function in various ways other than just sending and accepting cryptocurrencies. A lot of sophisticated and automated functions can be enabled for the users through smart contracts such as staking and yield farming.
Therefore, these lines of codes are the foundational element of the DeFi ecosystem.
While the importance of code in DeFi is obvious, very few people understand the consequences of not giving that importance. As a result, many have tasted the dark side of DeFi when the code does not work as it should. This includes a loss of millions of dollars.
Therefore, when it comes to making sure your DeFi app is efficient and successful, the secret lies in the ecosystem.
Everywhere on the Internet, you can easily find the best practices to code, but what you need are ways to ensure that you provide the right environment for that code to do its magic. Before getting into the ecosystem, let us first see a few considerations. From the perspective of coding, the following points should be kept in mind:
- Understanding the security vulnerabilities as well as coding loopholes and writing the contracts accordingly.
- Getting regular security audits for reputable firms.
- Using the latest version of the programming languages used to write the code.
- Selecting an appropriate development environment.
- Documenting the code properly
- Learn from other’s mistakes – a lot of hacks happening in DeFi to learn from
However, these practices can only help you in maintaining the quality of the application. To enhance the usability or adoption of a DeFi application, the following points must be kept in mind.
Best practices to create efficient and successful DeFi applications
With this exponentially expanding space, your idea for a DeFi app is not going to be the only one in the market. Even if it is unique, there are going to be several other players that can be recognized as a spin-off for your idea. This space is so dynamic that you will see multiple applications implementing your unique concept in just a few days after you release it.
Connecting with other DeFi applications hence becomes a viable option. This allows you to establish a market presence and ensures that your idea remains unique no matter how many people copy it.
Mergers are not that easy though. They need to be well-planned, well-researched, and well-executed. While the process can be quite painful, the outcome is worth it.
Meaningful collaborations can also open doors to further innovation and unknown use-cases. In a nutshell, it can be the Midas touch for your DeFi application.
(ii) Honest Reviews by Communities
Do listen to what the communities say about your application and follow their advice. There would be several dedicated communities that would be following your decentralized application. These users always share their opinions and give reviews.
This mainly happens on Twitter or in Telegram groups. Sometimes they even mail you or reach out personally.
It is only fair that your DeFi or “decentralized finance” application takes the opinion of all. This does not mean that you have to accommodate all their demands, that is not possible nor should be done. But what this means is that users feel more connected with your DeFi application, making it truly decentralized.
(iii) Analysis of Business
Various decentralized finance applications and projects have been crushed down not because of their lack of technology or innovation but because of their casual attitude towards the analysis of the business. If you intend to create a decentralized financial application then you must analyze your vision and ideas, it’s a must drill in this arena. Your DeFi application shall stand out from others when you:-
- Introduce unique and interesting concepts in the market.
- Make it more cost-efficient
Having an extensively defined roadmap should be the first step.
(iv) Experienced team
The creation of the DeFi application requires a widened range of experiences, knowledge, and skills that would consist of both finances and blockchain. This is the reason why an experienced set of people is so much necessary who can develop and update with time.
It is a common misconception that experienced DeFi developers are hard to find because developers all around the globe have started working in DeFi and their experience in other technologies plays a crucial role.
One of the most important things to consider while building a successful DeFi application is the community. Having the right set of users is a crucial factor defining the success of your application. However, at the same time, having the right set of tools and technologies is also important. Therefore, interoperability becomes a de facto practice.
The current ecosystem is autonomous with various Blockchain platforms facilitating unparalleled solutions. As a result, multiple applications are being built on multiple platforms which are unable to communicate with each other in a technical sense. Therefore, interoperability is the need of the hour which ensures that your DeFi application should have the best of all worlds.
Apart from the aforementioned points, the fact that smart contracts are the backbone of the DeFi ecosystem can not be stressed enough. It is necessary to understand the role of smart contracts in a DeFi application and why they should be your first priority.
About Smart Contracts
Smart Contact is an automated program that operates without any indulgence of humans. It doesn’t require an authority, nor does it require any third party to run it or validate it. Smart contracts remove unwanted paperwork and cut unnecessary expenses related to establishing authenticity and trust in the network. With a few predefined conditions, the whole network interaction can be standardized.
The real essence of smart contracts is their applicability in multiple domains ranging from basic financial services to trading, stablecoins, exchanges, digital asset trading, and much more.
Think of smart contracts as digitized and decentralized versions of your traditional contracts. There is no doubt in the fact that Smart contracts are far better than centralized mediums. Smart contracts are quick, they are cheap, they are efficient, they are transparent, they are precise, they are secured, and are highly cost-efficient.
The growth of DeFi space needs to be sustained and certain practices need to be adopted to ensure that this space continues to grow in the right direction. After tasting the benefits of DeFi, it is impossible to go back so needless to say, the future of finance is decentralized.
Therefore, we need to ensure that the future stays secured and best practices are followed from the very start such as auditing of smart contracts multiple times from a trustworthy firm such as QuillAudits.
Reach out to QuillHash
With an industry presence of years, QuillHash has delivered enterprise solutions across the globe. QuillHash with a team of experts is a leading blockchain development company providing various industry solutions including DeFi enterprise, If you need any assistance in the smart contracts audit, feel free to reach out to our experts here!
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