A Guide To Defi App Development: Benefits, Features And Cost

As we move into 2024, the financial sector is leveraging advanced technology to facilitate financial operations, and DeFi (decentralized finance) has transformed the finance industry’s landscape. 

It has changed how we transact, invest, and interact with financial services, replacing the traditional banking system.  However, the integration of blockchain technology is shaping decentralized finance. 

Due to this, revenue in the DeFi market is projected to reach US$418.7 m in 2024. In terms of global comparison, America has the highest revenue generation, US$73,350 in 2024. 

For entrepreneurs, developing a decentralized application creates an opportunity to utilize the potential growth of a decentralized market. Therefore, developing a decentralized app is a lucrative opportunity for business enthusiasts. If you are not investing in this niche, you are missing out on a potential revenue generation source. 

In this blog, we will discuss everything related to DeFi apps, from how to build a DeFi app to the costs of DeFi application development. 

What Is Defi App Development?

Decentralized Finance (DeFi ) is a financial umbrella for decentralized currency created on blockchain technology. They were developed to become an alternative to the banking sector and replace traditional financial systems with modern and more functional technologies based on open-source protocols. 

Moreover, defi apps are built on top of blockchain networks like Ethereum, Solana, or Polakdot, which provide the underlying infrastructure for secure, transparent, and tamper-resistant financial transactions. 

They are typically developed as decentralized applications that run on a decentralized network rather than a centralized server. This ensures that a single entity does not control the application and is resistant to censorship or interference. 

However, developing a defi app requires expert developers to understand your project’s concept and needs. But before inventing the development of defi app, let’s understand how it works.

“DeFi has the potential to create equal opportunity through peer-to-peer networks. It’s one of the greatest advantages it offers.” Jordan Kruger, CEO and Co-Founder, Vesper Finance

How Does Defi Application Work?

You must know about blockchain technology to understand how the Defi app works. Defi apps are built on top of blockchain technology, typically Ethereum.

Blockchain is a network that receives information and converts it into data blocks. 

These data blocks are then stored in a chain-based system with date and time so information cannot be manipulated, changed, or stolen. 

Implementing smart contracts will enable various financial services and transactions to be decentralized without the need for traditional financial intermediaries. 

Now, these self-executing algorithms are used to manage and track assets in a blockchain system. They automatically enforce the terms and conditions of an agreement. When predefined conditions are met, the smart contract automatically executes the corresponding. 

For example, if a contact offers to send money from account Y to Z every Thursday, it will only do so if Account Y contains the required funds. No one can manipulate the contract and add account Z to steal funds. 

The best part is that information is publicly available to all network participants, which fosters transparency and reliability. Contracts that are faulters will come quickly under community scrutiny. 

How Is DeFi Different From Traditional Finance?

DeFi is not just another financial system; it’s a revolutionary force set to transform traditional finance. It operates on decentralized blockchain networks, eliminating the need for centralized financial institutions as intermediaries. 

Let’s understand it better by looking at the comparison table.

Why Should Businesses Invest In Defi App Development?

DeFi has revolutionized the financial system worldwide. This rising demand for decentralized financial services is due to the advancement of blockchain technology. Such innovation will gain traction and replace the traditional centralized system for good. 

Therefore, investing in decentralized finance app development is a lucrative business opportunity. Understanding the market size and stats will help you better understand it. 

• As of 2022, the global decentralized finance market is already valued at a substantial USD 13.61 billion, with a projected growth of 46% from 2023 to 2030. Due to large-scale decentralized market consumption, the global defi market size was $11.96 billion in 2021 and will reach $232.20 billion by the end of 2030. 
• Another report shows that the DeFi market size is estimated at USD 46.61 billion in 2024 and is expected to reach USD 78.47 billion by  2029

The revenue of the DeFi market worldwide is estimated to reach a promising US$418.7 million by 2024, highlighting its significant financial potential.

These stats prove that the rise in innovative technology like blockchain has fueled the DeFi market. Because of the growing demand, entrepreneurs are willing to invest in decentralized application development.

Winklevoss, twins billionaire of crypto, said the DeFi sector will be the most critical factor for the crypto space. They are confident about the Ethereum due to the potential of the DeFi sector. 

Combining both market stats and their bullish outlook indicates opportunities for growth during the forecast period. The report suggests an increase in market competition further, so now is the time to invest in DefI app development to make a profitable business out of it.  

Also read: A Complete Guide To Fintech Mobile App Development

Types Of Defi App Development You Can Consider For Your Business

The wide adoption of blockchain technology allows businesses to generate high revenue by providing solutions that manage decentralized finances. To build a defi app, you must know the types first. Take a look

1. DEXs ( Decentralized Exchanges)

Decentralized platforms are more flexible and enable the peer-to-peer trading of cryptocurrencies or other digital assets. Users can easily manage their finances without intermediaries and trade cryptocurrencies directly from their wallets.

Thus, some of the popular DEX platforms are Uniswap, Curve Finance, and Sushiswap, which enable users to manage their finances independently. However, businesses can develop their own DEX to facilitate trading and provide liquidity for their customers. 

2. Yield Farming Platforms

Yield farming platforms allow users to earn cryptocurrency rewards by providing liquidity to DeFi protocols. These platforms enable businesses to offer their customers opportunities to generate passive income on their digital assets. 

Compound, Yean Finance, and Aave are some popular yield farming platforms. Thus, a platform like Curve Finance focuses on stablecoin trading and liquidity provision with low slippage and costs. 

3. Lending Platforms

With DeFi lending platforms, users can borrow or lend cryptocurrencies using smart contracts to automate the process. By lending their crypto holdings to borrowers, users can also earn interest on their crypto holdings.

Compound, Maker, and Aave are popular lending platforms that offer unique features such as various lending assets, algorithms, interest rates, etc. If you own a finance business, you can develop a lending platform or integrate with existing ones to provide lending and borrowing services to your customers. 

4. Stablecoins

Stablecoins are cryptocurrencies designed to maintain a stable value, often pegged to a fiat currency like the US dollar. Meanwhile, USDC is controlled by a stablecoin produced by a consortium that includes Circle and Coinbase. Both are used for lending and trading in the DeFi ecosystem.

USDC, DAI, and Tether businesses can develop their stablecoins to facilitate transactions, reduce volatility, and provide a more stable medium of exchange. 

5. Prediction Markets

Decentralized prediction markets allow users to bet on the outcome of future events, such as financial markets, sporting events & elections, using smart contracts to facilitate the transactions.

Augur and Gnosis are famous prediction market examples that allow users to buy and sell event results. Businesses can develop their prediction market platform to enable their customers to participate in these markets. 

6. Crypto Wallets

Crypto wallets are applications that allow users to store, manage, and interact with their digital assets, including cryptocurrencies and DeFi tokens. They support various cryptocurrencies and provide functions for tokens and conversions.  

You can develop crypto wallets to provide a secure and user-friendly way for customers to manage their digital assets. For instance, Trust Wallet and Coinbase Wallet facilitate cryptocurrency and store NFT tokens. 

7. NFT Apps

Non-fungible token apps are blockchain-based applications allowing users to buy, sell, and exchange NFTs on the NFT marketplace using mobile phones or tablets, regardless of location. 

NFT assets are art pieces, digital content, or videos tokenized using blockchain. Digital Artists, musicians, and game developers have established ownership of their artwork, so every time someone sells it, they get cut in that. 

5 Best Defi Apps In the Current Market

DeFi apps are creating a buzz in the crypto market. In 2021, the number of DeFi users reached 7.5 million, an increase of 7.5 million in the last two years.

If you are an entrepreneur, investing in decentralized finance app development can bypass intermediaries, enhancing direct interaction with a decentralized network.

We have created a list of the top five DeFi apps in the current market; take a look. 

1. AAVE

AAVE is a decentralized app that allows users to lend and borrow cryptocurrency securely. The user has complete control over their funds, as the smart contracts facilitate the funds between lender and borrower. 

The platform offers a unique flash feature that enables users to borrow funds without collateral as long as the loan is repaid within the same transaction.

Thus, the app benefits both parties: lenders can get quick cash when in need, and borrowers profit from lending their cryptocurrencies. The platform charges borrowers a lower yearly fee than traditional centralized banks. 

2. Uniswap

One of the largest decentralized exchange platforms with over TVL north of $6 billion. Like any other DeFi platform, it allows traders to swap between ETH and other ERC-20 tokens in a peer-to-peer manner without the need for a centralized exchange, 

The automated market maker (AMM) model allows users to trade tokens directly from their wallets, giving traders more control.

However, Uniswap is known for its high liquidity, user-friendly interface, and efficient trading, making it popular among DEXs in the DeFi ecosystem. 

3. Compound

Unlike AAVE, Compound is a decentralized lending and borrowing platform that allows users to borrow digital assets such as cryptocurrencies, Ethereum, bitcoin, and stablecoins. The platform utilizes a unique interest rate model adjusted based on market and supply demand.

Anyone can contribute to the liquidity pool and start earning compound interest quickly. This provides competitive rates for both lenders and borrowers. The platform also utilizes a digital governance model, allowing users to participate in platform decisions. 

It is the most secure, open platform, with over $6 billion in its liquidity pool. However, it relies on the stability and performance of the Ethereum network. 

4. Curve

Curve is the best option if you are looking for DeFi apps for stablecoin swaps. It has a competitive advantage because of its low transaction fees compared to the possibilities in the DeFi ecosystem.

Anyone can use the Curve liquidity pool to power stablecoin swaps, and you can also create a liquidity pool in the Curve factory. 

Investors can provide liquidity to Curve’s pools to earn rewards from swap fees. It is known for ultra-low fees but makes up for them in sheer volume. 

5. SushiSwap

SushiSwap is an Ethereum-based DeFI platform that includes DEX, a lending platform, and various yield farming opportunities. Unlike Uniswap, it allows users to create liquidity polls for their tokens by providing ETH and ERC20 tokens of their choice and swapping them for another. 

With over $4 billion locked in its trading platform, its emerging DeFi platform is known for its competitive trading fees, liquidity incentives, and decentralized governance model. 

This model allows the community to shape its development. It supports a wide range of cryptocurrencies, catering to the diverse needs of DeFi users. 

Benefits of Developing Defi App

We have discussed the market potential of Defi apps, and developing a DeFi app can offer several benefits for businesses and developers. Let’s understand the benefits by looking at the following point. 

1. Globalization 

Due to the unrestricted platform, DeFi apps are accessible globally. This allows businesses to reach a broader customer base and participants in global financial markets, which will help open up new revenue streams and growth opportunities for businesses. 

2. Cost-effective

Due to decentralization, people don’t need intermediaries to facilitate or manage their financial transactions. This will significantly reduce transaction costs, overhead, and operational expenses. 

3. Customizability 

Businesses can invest in defi app development as it can be customizable to your business’s specific needs, which helps create a more tailored financial system. They can either create their own or utilize the existing ones in the market to meet the unique requirements, whether for lending, fundraising, or investing. 

4. Round-the-clock services

The best thing about DeFi apps is that they provide financial services 24/7, 365 days a year. This is not unlike traditional banks, which operate for strict hours. DeFi platforms work on blockchain networks like Ethereum, Tron, Solana, etc., allowing users to trade or lend digital assets regardless of time and location. 

5. Smart contracts 

DeFi application utilizes smart contracts to automate financial transactions, reducing human error risk. These intelligent algorithms can automatically automate the predefined rules and conditions, making the process secure and efficient. 

6. Transparency 

The transparent nature of blockchain-based DeFi apps can help businesses build trust with their customers and partners. Investing in Defi app development services can also improve compliance, reduce fraud, and manage risk. 

7. Composability and integration 

DeFi apps are designed to be composable, allowing businesses to integrate and combine different DeFi protocols and services. This process can lead to the development of more complex and tailored financial solutions for businesses. 

8. Potential for high returns

Successful DeFi apps generate significant returns for developers and investors as the DeFi ecosystem proliferates. This strongly incentivizes businesses and developers to invest in DeFi app development.

Must-Have Features For Defi App Development

To create a successful DeFI app, you must choose the correct features to give you a competitive advantage, meet your users’ needs, and improve your financial operations. We have created a table of essential features; take a look. 

Advanced Features To Consider For Defi Wallet App Development

When your DeFi app is established successfully in the market, you can implement advanced features that will help you gain a competitive advantage. 

Some of the advanced features are in the table below. 

A Step-by-step Process To Build A Defi Wallet App

If you want to build a successful DeFi app, it’s crucial to partner with an experienced development company that understands your needs and supports you in creating a platform that thrives in a competitive market. 

Let’s look at the step-by-step DeFi development process.

1. Define the use case

First, decide on the concept of the DeFi app. Will it be a decentralized exchange DEX, a lending platform, a marketplace, etc? 

Conduct deep research on the existing DeFi platforms, identify your target audience, and determine who will benefit from your application. Then, create a unique USP for your app. 

2. Blockchain selection 

Choose a suitable blockchain platform for your DeFi app. Some popular options are Ethereum, Solana, or Avalanche, each with its advantages and considerations. 

Also, decide on development tools and frameworks. Truffle is a development and testing framework for building smart contracts for Ethereum. Tools like Ganache allow the creation of local Ethereum blockchain to test smart contracts. 

3. Smart contract development 

Smart contract development is the core of your DeFi application. Smart contracts are self-executing code deployed on the blockchain that governs financial transactions with your DeFi app. 

ERC20 is a fungible token used to stake and unstake a smart contract. To create this token, you need to install the OpenZeppelin library. Ask your team of developers to implement the standards for ERC20 and ERC721, as they are essential for creating a smart contract. 

4. Decentralized exchange (DEX) Integration 

In this step, integrate your DeFi app with popular decentralized exchanges DEXs to enable token swaps and liquidity provision.

Moreover, integrates with other DeFi protocols, such as lending platforms, yield farming, and staking, to provide a comprehensive DeFi experience. 

5. Implement security and compliance.

Robust security measures are crucial for DeFi platforms to secure them from cyberattacks. These measures include multi-factor authentication, transaction monitoring, and secure storage of private keys. 

Ensure compliance with regulatory requirements, including KYC and AML processes. Conduct regular security audits and penetration testing to identify and address vulnerabilities. 

6. Frontend Development

The biggest concern with DeFi apps is navigation. The most common drawback is that users who struggle to navigate the app uninstall it.

To overcome this issue, ask your team of designers to build a DeFi app with an intuitive and user-friendly interface that is easy for users to understand. Users can also easily navigate throughout the app, enhancing user experience, which is crucial for your app’s success.  

Additionally, educational resources and guides will be incorporated to help users understand the DeFi ecosystem and the wallet’s functionalities. 

7. Backend Development Stage

In this stage, build a mobile-friendly DeFi app for iOS and Android platforms. By leveraging native mobile development frameworks and libraries to ensure a seamless user experience and optimal performance. 

Integrating features like biometric authentication, push notifications, and mobile-specific security measures.

8. Implement Wallet Connectivity

Now, enable users to connect their existing cryptocurrency wallets, such as MetaMask or Coinbase Wallet, to your DeFi app. This will create seamless cross-chain interoperability, allowing users to manage assets across different blockchain networks. 

7. Testing and Auditing 

Conduct rigorous testing and auditing of your smart contracts, including unit testing, integration testing, and end-to-end testing. This will help you identify errors and vulnerabilities in your application. 

Perform security audits and engage external experts to assess vulnerabilities. This is critical to preventing user financial losses.

8. Deployment 

Once thoroughly tested, you can deploy the frontend application to a hosting platform. 

Before deploying your app, the appropriate app stores, such as Google Play and App Store, ensure that it meets all the guidelines and complies with the platform. 

9. Marketing and Launch 

After successfully deploying your app on the app platform, you can launch it in the market. But before launching, create a marketing strategy to reach and attract your target audience.

You can participate in industry events and leverage social media to build brand awareness and user trust. This will help you make a strong community around a DeFi app and execute a successful launch and ongoing promotion.

10. Continuous Improvement 

DeFi is a constantly evolving space. Continuously monitor user feedback and implement improvements accordingly. 

Update your DeFi application regularly to address bugs, integrate new features, and adapt to changing regulations or industry standards. 

How Much Does It Cost To Build A Defi App?

The cost to build a DeFi app depends on various components, as developing DeFi apps is easy. It may vary significantly, ranging from $20,000-$200,000, depending on the complexity of your app. 

Defi app development requires expertise and more effort as developing decentralized apps is complex. However, the factors that majorly affect the cost of development are the app’s complexity, its features and functionality, and the developer’s location.

Let’s understand the cost by breaking down according to complexity:

1. Basic DeFi apps

The essential DeFi app costs between $20,000 and $50,000 and includes critical features and functionalities such as wallet integration, basic security features, contact support, and transaction history. 

2. Intermediate DeFi apps

The intermediate DeFi apps could cost $50,000 to $100,000 and have moderate features and functionalities, such as advanced security protocols, integration with DEX, staking, yield farming, etc. 

3. Advanced DeFi apps

The advanced DeFi apps could cost $100,000 – $200,000 and include advanced features such as multichain wallet support, advanced analytics, NFT support, customizable dashboards, etc. 

Overall, these are rough estimates. For an accurate estimation, consult with an expert development company. To ensure successful development and deployment, it is essential to clearly define your app’s requirements and budget.

Factors Affecting Defi Application Development Costs

Several factors affect the cost of developing a DeFi application, including app features, selected blockchain platforms, and security measures. Therefore, it is crucial to consider the cost before investing in the development of the DeFi app. 

Let’s explore the factors affecting the Defi application development cost down below:

1. Application Complexity 

The more the complexity, the higher the cost. More features, functionalities, and an advanced user interface require additional resources and time, leading to higher costs. 

2. Choice Of The Blockchain Network 

The chosen blockchain network will affect the cost because each network has its own development environment, scalability options, and transaction fee, which can significantly impact the overall budget.

3. Complexity Of Design 

Complex design can eventually increase the cost of development. Custom designs requires skilled designers and more development time, while more straightforward designs may reduce expenses. 

4. Security Measures

Robust security measures are crucial for the DeFi application due to the high risk of cyber threats and vulnerabilities. To eliminate these risk factors, security measures are essential, which can be costly and impact the cost of development. 

5. Smart Contract Development 

The development and testing of smart contracts are critical components of DeFi applications. Writing secure and efficient smart contracts requires specialized expertise, which can increase costs. 

6. Integration with external services 

Integrating the application with third-party services can add complexity and cost because each integration requires additional development & potential ongoing maintenance. 

7. Developer’s location

The location of the development team is another factor that significantly impacts the cost. Development teams in regions with higher living costs, such as American and European countries, typically charge more than those with lower costs, such as Asian and Eastern European countries. 

However, understanding these factors can help you estimate the costs associated with developing the DeFi application and make informed decisions throughout the development process. 

Tools and Technologies We Used For Defi App Development

Choosing the correct set of tools and tech stack accelerates the development process, and you can quickly build DeFi apps that comply with the industry standard. 

We have created a table of tools and tech stacks in the following table. Take a look. 

Common Challenges And Solutions For DeFi App Development

Investing in decentralized finance app development can benefit businesses, but several challenges exist. Implementing effective strategies can overcome these challenges. Here are some common challenges and their solutions.

1. User Experience

New users find navigating DeFi apps complex and intimidating, and they need help grasping the concepts of liquidity, yield farming, etc. To overcome this situation, you can focus on creating an intuitive interface that guides users with clear instructions and offers timely customer support. This will enhance the user experience.

2. Scalability Issues

In high-volume transaction time, this can often lead to traffic or network congestion. So, choose scalable blockchain solutions or layer-2 scaling technologies to manage this complexity. 

Security vulnerabilities

DeFi apps are prone to cyber-attacks because of the assets they manage, and managing security vulnerabilities is challenging. To overcome this situation, you can conduct rigorous testing and security audits or implement third-party security tools to enhance the app’s security. 

3. Regulatory Compliance

Navigating the ever-transforming regulatory landscape is complex. Implementing compliance features within the app can help you stay informed about regulations and help users adhere to local laws.

4. Smart Contract Bugs 

Poor, smart contract codes can lead to financial losses. Rigorous testing and third-party audits can help identify bugs and errors before deployment.

How To Choose EmizenTech For DeFi App Development Services?

Decentralized finance applications, the latest trend in crypto trading, have revolutionized digital asset trading. These platforms offer a host of benefits, including enhanced transparency, efficiency, and accessibility, thereby transforming users’ trading experience. 

It has streamlined the overall process of assessment management, making it more secure. Users and traders can easily lend or borrow crypto without third-party intermediaries. 

The expansion of decentralized exchanges and the rise of blockchain technology shows the promising future of DeFi apps.

EmizenTech is the top choice for choosing the right DeFi app development services. We are at the forefront of DeFi app development, with a proven track record of creating advanced DeFi solutions, making us the ideal partner for your project.   

As a trusted blockchain app development company, we have successfully delivered solutions globally. Our portfolio speaks about our success rate; we have satisfied clients because we give them transparency during the development process. If you plan to create a defi app, partner with us, leverage the industry’s competitive advantage, and stay ahead of the curve. 

Conclusion

Developing a DeFi app is a lucrative business opportunity. The defi industry is rapidly growing, with an over 40% increase in defi users. By understanding the benefits and costs associated with developing a DeFi app, you can make an informed decision to create one for yourself.

However, to successfully launch your app in the market, partner with an app development company that understands your vision and can help you create a unique product. 

With the right approach and expertise, your DeFi application can contribute to the financial ecosystem, offering innovative solutions and enhancing user experiences.

Frequently Asked Questions