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What a crypto exchange is

A crypto exchange is a trading platform where various cryptocurrencies can be sold, purchased, or exchanged. Similar to Forex, a crypto exchange brings together buyers and sellers of a currency (in this case, cryptographic), ensuring the reliability of deals. As with any exchange, it works on a trading engine, with the accuracy and speed of operations depending on the optimisation of the code. The engine verifies placed orders for asset backing, maintains records of orders in the database, and prepares data for display in a web/mobile app or trading terminal.

The first crypto exchanges were centralized and only allowed cryptocurrencies to be traded. As the market developed, the following classification emerged:

1. Bitcoin exchanges or altcoin exchanges, where only cryptocurrencies are traded, mainly in pairs with bitcoin and popular altcoins.
2. Cryptocurrency exchanges with fiat support, where cryptocurrencies are traded both in pairs with themselves and with fiat currencies.
3. Cryptocurrency derivative exchanges, where users trade contracts on the future prices of cryptocurrencies by placing orders for a short or long position.
4. Cryptocurrency exchanges with margin trading that provide leverage.
5. Centralized exchanges (CEXs) of registered companies that set the rules for trading, usually operate under a licence, and are subject to regulatory authorities.
6. Decentralized exchanges (DEXs) that create markets algorithmically and control them via a protocol, operate upon the basis of smart contracts and an automated market maker, and aren’t regulated by anyone.

Many crypto exchanges have characteristics of several types at a time, and large CEXs often launch a subsidiary DEX.

Popular cryptocurrency exchanges

There are over 650 cryptocurrency exchanges operating on the market, verified and listed on Coinmarketcap. Each of them tries to provide users with special conditions.

When creating a cryptocurrency exchange, keep in mind that traders pay attention to the following characteristics:

• Range of listed coins and tokens, available currency pairs
• Commission for trading, margin, deposit, withdrawal
• Methods of depositing and withdrawing funds
• Liquidity, daily trading volume
• Protection of user accounts and exchange wallets.

Spot centralized exchanges are the most popular. Amongst them, the top 3 are Binance, Coinbase, Kraken, according to the same Coinmarketcap.

Binance

Binance was launched in Hong Kong in 2017 and moved to Malta in 2018. In just a couple of years, it has grown from an ordinary exchange to an entire ecosystem where 12 projects are operating today. Binance offers 8 services for regular trading, 7 for derivative trading, 10 for earning and investing.

Specifics of Binance:

• Centralized, registered with AMF (France), FIU (Lithuania), FSA (Sweden), OAM (Italy), the Bank of Spain.
• Native coin BNB and stablecoin Binance USD (BUSD), bringing benefits to holders.
• 389 available cryptocurrencies.
• 11 fiat currencies: AUD, BRL, EUR, GBP, NGN, PLN, RON, RUB, TRY, UAH, ZAR.
• 1661 trading pairs.
• Support for derivatives and margin trading.

www.binance.com

Coinbase

The company Coinbase was established in California, USA in 2012. The initial version of its exchange was called GDAX, while the Coinbase Pro version was launched in 2018. Coinbase offers 13 services to private users, 9 services to institutional investors, 10 tools to developers.

Specifics of Coinbase:

• Centralized, registered with FinCEN (US) and FCA (UK).
• Native stablecoin USD Coin (USDC).
• 246 available cryptocurrencies.
• 3 fiat currencies: EUR, GBP, USD.
• 527 trading pairs.
• Support for derivatives.

exchange.coinbase.com

Kraken

The company Payward was established in California, USA in 2011. It launched an exchange named Kraken in 2013. Kraken periodically absorbs other exchanges and acquires services, for example: the exchanges Cavirtex, CleverCoin, Coinsetter, Crypto Facilities; the services Glidera and Cryptowatch.

Specifics of Kraken:

• Centralized, registered with FinCEN (US), FINTRAC (Canada), FCA (UK).
• 229 available cryptocurrencies.
• 7 fiat currencies: AUD, CAD, CHF, EUR, GBP, JPY, USD.
• 729 trading pairs.
• Support for derivatives and margin trading.

www.kraken.com

Revenue of popular exchanges

Cryptocurrency exchanges earn on commissions for trading and withdrawing crypto/fiat from the account. Trades are taxed at a minimum if a user pays for a fee with native exchange tokens, as well as trades in very large volumes monthly. Therefore, examples of fees in the table below start at 0%.

As a rule, exchanges don’t charge a deposit fee. The fee for withdrawing cryptocurrencies almost completely goes to pay miners or stakers of the network via which the transaction is carried out. Considering that each network has its own tariffs, we only indicated the fees for withdrawal of BTC and ETH for reference.

The last column, with volumes in July 2023, will help you calculate the approximate daily revenue from spot trading only. Take the average of fees for makers and takers and multiply by volume to get the average revenue of a popular exchange.

What a P2P platform is

A P2P platform is a service that allows users to sell and buy cryptocurrency directly. The buyer and seller interact with each other without the mediation of a third party. And the P2P platform only helps to select ads, pre-checks and evaluates their creators, as well as provides escrow accounts for cryptocurrencies.

CEXs usually have strict rules and requirements for users, including passing identity verification. Unlike them, P2P platforms are more loyal to users. To find the best offer in a few seconds, they only need to fill in several fields of the search form.

How P2P platforms operate

P2P platforms resemble crypto exchanges only in that they also match sellers with buyers, facilitating trading for those who need to quickly sell or buy cryptocurrencies. Otherwise, they operate very differently from both CEXs and DEXs:

• Deals are made by users themselves, rather than via execution of orders.
• The best offer is selected by the user based upon the specified cryptocurrency, amount, and payment terms.
• There are many more payment methods: bank cards and accounts, transfers via SWIFT and SEPA, electronic payment systems.
• There are no commissions for deals because users made them directly.
• Sellers’ cryptocurrencies are stored in escrow accounts, which protects both them and buyers from violating the terms of the deal.
• Most platforms have a user rating system to improve the quality and security of deals.
• The seller and the buyer can discuss deals in a chat window.
• If the parties have problems like a dispute, they can file an appeal through their personal account.

When creating a P2P platform, keep in mind that users pay attention to the following factors:

• Interface, which should be intuitive and user-friendly so that users can quickly create or find ads and make deals easily
• Security, which should include two-factor authentication, encryption, confirmation of withdrawal using a code in SMS and email
• Reputation, which should be impeccable, because today sellers and buyers carefully check crypto services due to frequent scams
• Customer support, which should instantly process appeals and solve problems.

Users additionally pay attention to available payment methods, the number of ads (liquidity), and the absence of scammers on the platform.

Do you need a P2P platform? Netside develops them from scratch and also implements a P2P service on existing trading platforms. Contact us on Telegram, and after a detailed discussion, we will get started on your project right away!

What an instant exchange service is

A crypto instant exchange service is a website without a trading engine and an order book. It itself acts as the second party in trading, that is, it sells and buys cryptocurrency. In this way, it more resembles an offline currency exchange point.

Unlike crypto exchanges, where prices depend on the balance of supply and demand, on an instant exchange service, the owner sets the exchange rates themselves. On the one hand, this is an advantage of instant exchange services because they don’t allow users to practise ‘pump’ and ‘dump’ schemes. On the other hand, this is their disadvantage because the prices on crypto exchanges are more favourable.

It’s more profitable to create an instant exchange service than a crypto exchange: development costs half as much and pricing depends on the owner, not traders. While administrators often look at market prices on exchanges, many buy and sell at significantly different exchange rates. And their customers can’t choose an acceptable selling or buying price for themselves, or specify their own, unlike orders on exchanges.

When creating an instant exchange service, keep in mind that users pay attention to the following characteristics:

• Opening hours
• Efficiency of customer support
• Variety of currency pairs with popular coins and tokens
• Slight difference with market prices
• Low commissions
• User interface convenience
• Smooth operation.

How to create a crypto exchange

There are two practical approaches: creating a cryptocurrency exchange from scratch or purchasing a ready-made software solution.

Developing a crypto exchange from scratch

A difficult but competent approach that allows you to get to know the crypto market better by coming through all stages of creating the future service, from concept design to final release. In a basic version, a crypto exchange consists of a trading engine, admin panel, database, user interface, account management centre, and web wallets.

Advantages:

• Confidence in security
• Getting a custom product
• Opportunity to refine and improve an exchange.

Disadvantages:

• Launching ultimately takes longer than installing a ready-made solution
• Turnkey crypto exchange is more expensive as a result.

Polyx as an example of creating a crypto exchange from scratch

We were given the task: to develop a cryptocurrency exchange so that it would be an ‘all-in-one’ service. Its clients were to be not only professional traders and investors, but also ordinary users who could buy cryptocurrency just like any digital product. Therefore, we added various useful services to the basic version to expand audience reach.

Today, Polyx.net platform consists of 11 components:

1. Crypto exchange.
2. Instant exchange service (based on the exchange).
3. Web wallet for cryptocurrencies.
4. Portfolio for crypto assets.
5. Referral program.
6. Blog with cryptocurrency news.
7. Mobile wallet (separate apps for iOS and Android).
8. Native token, PLX, with staking option.
9. Launchpad for crypto projects.
10. P2P marketplace.
11. DEX on a subdomain.

We didn’t implement them all at once, but gradually, in stages. For most customers, this is more convenient: you can control work progress, plan a budget, suggest new ideas during the development process, as well as order additional sections and functions gradually. Creating a turnkey crypto exchange took us 3 months (in 2019); the first 6 components were included. In 2021, we added components 7, 8, and 9, and in 2022, a couple more actual components.

We at Netside always start with the development of the terms of reference. Without this, it is impossible to estimate the time and cost of creating a turnkey cryptocurrency exchange. The TOR costs ~$5000 and takes 100+ working hours.

White label solution

White label is the adaptation of an already developed product to your brand. A crypto exchange powered by a ready-made engine can be a fill-in alternative or additional service that you would like to offer to your audience. Typically, the main activity of someone who purchases a white label solution is not related to cryptocurrencies, but is quite close in subject matter. In such a case, an affiliated crypto exchange would help meet the demand for related services or attract new customers.

Advantages:

• Quick setup and launch
• Low start-up costs.

Disadvantages:

• No access to the source code, no certainty that it is secure
• Difficulty of custom modification, which will cost more than the engine itself
• Constant dependence on a developer who owns the software.

Financial and legal matters

It may seem that the key thing when ordering a cryptocurrency exchange is to solve technological issues, but in practice it is different. According to our estimations, solving financial and legal matters takes more than half of the time. Let’s list what needs to be done.

Legal entity registration

You should choose a jurisdiction that is loyal to cryptocurrency services. It’s not so easy as cryptocurrencies are still not widely recognized and approved by the governments of most countries. Here are the states that welcome cryptocurrencies: Estonia, Malta, Netherlands, Switzerland, the USA.

Obtaining licences

In many countries, activities related to trading and storing cryptocurrencies require separate licensing. For example, in Estonia, it is necessary to obtain two licences: one for storing cryptocurrencies (for wallets), the other for exchanging cryptocurrencies for fiat (for exchanges or platforms).

KYC, KYT, AML compliance

Financial system participants must comply with anti-money laundering laws (AML). The 5th AML Directive, in force in the European Union since 10 January 2020, imposes strict requirements on the procedures to verify customers and their transactions.

KYC — Know Your Customer. This is a requirement by regulatory authorities to verify identities and residential addresses of users. Of course, you can still collect documents from users, carry out verification, and check data against various databases (PEP, sanction lists, etc.) yourself. But it is easier to turn to services that help implement the necessary verifications easily and inexpensively:

• Sum and Substance from the UK (sumsub.com)
• Trulioo from Canada (trulioo.com)
• Veriff from Estonia (veriff.com).

KYT — Know Your Transaction. This is a requirement by regulatory authorities to verify the cryptocurrencies coming from users and block those received from ‘dirty’ sources. This will prevent coins used in criminal activities, drug trafficking, and financing of terrorism from getting into circulation. Various services that allow you to verify transactions via API will also be of help here.

AML compliance. A crypto exchange should employ a certified AML officer who will track suspicious transactions, file SARs (Suspicious Activity Reports), and send them to financial monitoring services. This officer must have a background in finance and a certificate from a recognized world community, such as:

• International Compliance Association (int-comp.org)
• Association of Certified Anti-Money Laundering Specialists (acams.org).

Make certain you meet the requirements before moving on to opening a bank account. You are unlikely to be able to open an account without this.

Opening a bank account

This is the most difficult task when launching a turnkey crypto exchange or instant exchange service. Banks consider cryptocurrency activities to be high-risk, so with a 99% probability they will likely refuse to open an account in Europe, even if your company has obtained the necessary licences and complies with AML laws.

The only way to get a current account is to open one in an electronic money institution. The way they work is that when you transfer fiat currencies to them, they are automatically exchanged for electronic money. And when you withdraw fiat currencies from the account, this electronic money is redeemed. It’s a bit confusing, but can be used. Strict requirements are also involved there, but they can actually be fulfilled.

Here are the financial institutions that open IBANs for cryptocurrency services:

How much a cryptocurrency exchange costs

Developers aren’t used to specifying the cost for an unknown amount of work. Without holding negotiations with the customer, it is difficult to make calculations because different customers have different requests. Nonetheless, everyone wants to know in advance how much it costs to create a cryptocurrency exchange.

For a preliminary estimate, companies conduct market research and provide a range of service costs so that customers can be guided when planning a budget. We did that too and found out that rates have come down somewhat this year (they just adjusted after the crypto boom). Today, development services are provided at the following rates:

If you still have questions, ask them via the form. We will explain everything in detail and work out a strategy for developing and promoting your cryptocurrency exchange!

Businesses should also be aware of the types of cryptocurrency wallets and their differences. And if a company is going to offer its clients a proprietary wallet, we will tell why it is better to develop a custom wallet while there are plenty of ready-to-use software wallets in the market.

What a cryptocurrency wallet is and how it works

Users often think that they store cryptocurrency right in their wallet. But in blockchain technology, coins actually stay in blocks forever after they are issued or mined. And a crypto wallet only acts as a tool that is used to manage addresses on the blockchain network as well as stores public and private keys to them.

A crypto wallet is a program or application that allows a user to interact with the blockchain: check balances, view transaction history, send and receive transfers. The latter means transferring rights to the cryptocurrency from one user to another. In fact, it isn’t even transferred because it is just assigned to a certain address on the blockchain.

Basically, a crypto wallet is similar to a bank account, only it is designed for transactions with cryptocurrencies. It shows a user how many coins they have on the balance, where they are received from, and where they are sent to. If it is a multi-currency wallet, it displays exchange rates and allows users to swap coins.

Types of cryptocurrency wallets

A crypto wallet in the form of a program, application, online service, or browser extension is considered a hot wallet because it has to be always connected to the internet. Hot wallets can be:

• Custodial or non-custodial, depending on who holds keys and controls a cryptocurrency.
• Web, mobile, or desktop, depending on the platform.

A crypto wallet that doesn’t need internet connection is considered a cold wallet. It has a physical form and can be hardware or paper.

We at Netside specialise in developing crypto wallets in the form of web and mobile apps, both custodial and non-custodial. Contact us on Telegram to discuss which type works better for you.

Custodial and non-custodial crypto wallets

This is the most important difference everyone dealing with cryptocurrencies should be aware of.

As we know, all transactions on blockchain networks go between addresses that look like bizarre combinations of letters and numbers. For example, a wallet address on Ethereum may look like this: 0x763a8268712D3E015919d0097F93601B0fd4F102.

Since information about all transactions is stored on the blockchain, everyone can easily view transaction history or the balance of any address. Special services called blockchain explorers are used for that.

To send coins to someone from their address, a user needs to sign a transaction using a private key, otherwise the network will reject it. Here’s the private key to the address from the above example: 0x34229daaf8fdb3e9d3861f1af065e8a8fa7887d76e33af19e18de8e6c33cd13f.

Only someone who knows the private key can send coins from the address. And if two or more people know the key, it will be impossible to determine who performed the transaction. This is why it is critical that the private key is stored safely.

Custodial crypto wallet

This is a wallet managed by a third party, which also stores users’ private keys on its side. Many consider this wallet type insecure due to high vulnerability. But the third party can help recover access to cryptocurrencies if the user lost their password or seed phrase.

Depending on the companies that own crypto wallets, there are two types of custodial wallets:

1. Exchange-based. Such a multi-currency wallet is provided by crypto exchange platforms that generate public addresses and store private keys of their users.
2. Proprietary. Such a single wallet is created by private developers that store users’ keys and all the data on their own servers.

Non-custodial crypto wallet

This is a wallet that allows a user to store private keys on their device without disclosing them to any third party. This wallet type is way more reliable in terms of security. But in this case, the user is personally responsible for storing crypto keys and seed phrases. If they lose them, their cryptocurrency will be gone for good.

Crypto wallets for different platforms

Now let’s look at three types of crypto wallets that have more obvious differences: web, mobile, and desktop. Each of them has its strengths, weaknesses, and risks. In the finance technology world, the more secure the solution, the more complex and restricted it is. So choose one that balances these factors and corresponds to your goals.

Web wallets

They are popular for the same reason as any web app or SaaS solution. Here are the advantages of web wallets:

• Easy to use
• Accessible on any device
• Device specs don’t matter.

Downsides: they may be less functional or less secure than other types.

If you are going to develop a web crypto wallet, don’t forget to enrich it with key features and enhance security. Otherwise the users will leave you for other crypto wallets, no matter how hard you try to retain them.

Mobile wallets

These have become the most popular amongst blockchain wallet users worldwide. Here are the advantages of mobile wallets:

• Easy to use
• Portable
• Paper wallet import
• Compatible with smartphone hardware (camera, Bluetooth, NFC).

Downsides: they may be laggy on low-cost smartphones. Malware may be distributed under the guise of a popular wallet.

If you are going to develop a mobile crypto wallet, don’t forget to optimize it and add it to all app stores from your official account. Also mention on your website, forum threads, and social media, where people can download your wallet. This way you will prevent them from getting to fraudulent websites with malicious clones of your app.

Desktop wallets

These are the most feature-rich. Just like mobile wallets, these crypto wallet apps store private keys on the user’s device (on a PC in this case). They don’t need a constant internet connection, and this is what makes them better than online wallets. Here are the advantages of desktop wallets:

• Broad functionality
• High security
• Better reliability compared to other wallet types
• Focus on tech-savvy users.

Some may find the last point disadvantageous. While digital currencies have already emerged from a narrow circle of enthusiasts and have reached the general public, an application designed for experienced blockchain wallet users may frighten newcomers away.

If you are planning to develop a desktop wallet, try to make its interface friendlier. And don’t forget to compose a helpful manual.

Hardware and paper crypto wallets

A hardware wallet is a physical device that stores addresses and private keys in an encrypted form. It looks like USB flash drives or MP3 players and plugs into a PC. Most have a small display that shows the current balance, address, and key. These are all functions hardware wallets have, just because they aren’t connected to the internet. Combined with encryption, this feature makes them very secure.

A paper wallet is a sheet of paper with the printed address and private key that are often duplicated in the form of QR codes. At first they were created on generator websites, then this function appeared in desktop applications. The latter also generate public and private keys and allow printing them with QR codes.

Hardware wallets and paper wallets work better for those holding larger amounts of crypto assets but rarely using them. Amongst them are long-term investors, large-scale miners, and crypto companies storing their or users’ reserves in cold wallets.

Important functions of crypto wallets

Both mobile and web wallets, as well as custodial and non-custodial ones, offer the following functions:

• Showing current balance and transaction history
• Sending cryptocurrency from one address to another
• Specifying transaction fees.

On top of that, there are three useful functions that should be implemented during the wallet development process.

User authentication

Most countries have recognized cryptocurrencies as digital assets. This is why both a cryptocurrency and related personal data should be protected and stored in a safe place. Your development company must ensure high security both for the cryptocurrencies and data of users.

To prevent fraudsters from getting access to your users’ accounts, keep all user data encrypted. Also provide an option to enable two-factor or multi-factor authentication and strengthen account access recovery.

QR code scanner

QR codes give your crypto wallet a range of advantages and growth potential. They allow cryptocurrency to be sent in a contactless way, thereby surpassing the capabilities of plastic bank cards. QR code may also come in handy for crypto payments and P2P transactions.

Transaction notifications

Any finance application has such a function as transaction notifications. Your crypto wallet should also be able to notify users. Push notifications are a means of validation and security. Crypto trading platforms with exchange-based wallets use them to notify users of cryptocurrency withdrawal requests.

Which crypto wallet app to order

There’s one rule in the crypto industry: everyone is personally responsible for their coins. This is what differs digital currency from fiat money that you can deposit to a bank account and rest assured it won’t go anywhere.

Purchasing a ready-made solution, such as a white label wallet, you will have to balance security and user-friendliness. The better the one parameter, the worse the other, and vice versa. Therefore, if you are going to store large amounts, consider ordering a cryptocurrency wallet app that will match your goals and needs.

Your proprietary crypto wallet app will open unlimited opportunities for users. Our cryptocurrency wallet development company can implement both the primary functions and advanced ones, namely:

• Multicurrency support
• Buying and selling crypto using fiat currencies
• Connecting a merchant to accept payments.

Our crypto wallet development process always include the following:

1. Writing terms of reference — 18+ hours.
2. Business and technical analysis — 20+ hours.
3. UI and UX design — 30+ hours.
4. Back-end development — 50+ hours.
5. Front-end development — 40+ hours.
6. Testing — 20+ hours.

How much it costs to develop a crypto wallet

The cost of cryptocurrency wallet development services depends on the type you need (custodial or non-custodial), as well as on the platform for which you need to create a cryptocurrency wallet. Of course, it also depends on the expected set of functions and the technology stack used.

Netside is ready to develop a crypto wallet offering any functions that you and your future users may need. Send us a request to find out how much the wallet app development will cost in your case.

The essence of blockchain technology

Blockchain is an innovative system for storing and transmitting information in the form of a chain of sequential blocks containing records of transactions. The blocks are included in a single database, which is automatically updated with each new transaction. This database runs simultaneously on thousands of computers—nodes—so that each of them always has up-to-date information. This achieves decentralization, where everything works without a ‘main server.’

The basic principle of blockchain is transparency of all operations. Each participant can view any transaction at any time, and no one can change or delete them. Each block of this ledger contains information about the previous block. Therefore, it is impossible to change information in an individual block ‘retroactively,’ as it will affect all previous blocks up to the first, genesis block.

At the stage of its emergence, the technology was only used for cryptocurrencies, and a little later it began to be used by shrewd banks. And today, the new system is penetrating even deeper into our lives. Platforms for blockchain development of business apps can monitor copyright compliance, product manufacturing processes and its compliance with declared standards, not to mention any financial operations.

Benefits of implementing blockchain solutions

The introduction of blockchain technology is a strategic decision that can take your business to unprecedented heights. By leveraging its capabilities, you don’t just optimize processes, but modernise them, as well as increase security and transparency. Here’s a brief list of the benefits that await you:

• Increased security. Decentralization together with cryptography provide the highest level of security, protecting your data from unauthorised access and forgery.
• Increased transparency. A distributed ledger provides transparency across the entire network, strengthening the trust of stakeholders.
• Data integrity. Immutable records ensure data integrity, making it a trusted source.
• Optimized processes. Smart contracts automate processes, reducing the need for intermediaries and speeding up transactions.
• Cost efficiency. Eliminating intermediaries, reducing errors, and automating tasks results in savings in the long run.
• Innovation opportunities. By adopting blockchain, you open doors to innovative business models and revenue streams that will set you apart in the market.
• Customer trust. Using financial technology enhances your brand’s credibility and builds customer trust.

Implementing blockchain into your business is not just an upgrade, but a transformation. Every advantage will find its way into your company, ultimately shaping a more competitive future. As an experienced team, we strive to leverage these advantages to develop unique blockchain solutions that meet our customers’ business goals.

Blockchain app development services

Blockchain development requires not only knowledge of programming languages, but also a deep understanding of the principles of decentralized apps and cryptography. The path from concept to its implementation can be very difficult. This is where professional blockchain developers come to the rescue, who can not only simplify this path, but also maximise the benefits for your company.

Netside has been developing blockchain apps for businesses for 4 years. Contact us and we will help you create your own cryptocurrency, crypto wallet, or crypto exchange!

Cryptocurrency creation

Cryptocurrencies fall into two categories: coins based on their own blockchain, and tokens that run on third-party blockchains. Stablecoins, which are backed by assets and pegged to their value, refer to tokens.

To develop a coin, we take the actual source code, make the necessary changes to it, and compile it. Typically, development consists of the following stages:

1. Writing the terms of reference.
2. Compiling the coin kernel and wallet for Windows and Linux.
3. Deploying full nodes.
4. Creating a block browser and mining pool.
5. Developing web and mobile wallets.

To develop a token, we create a smart contract and deploy it in an existing blockchain. The most popular platforms for issuing token:

• Ethereum
• BNB Chain
• Polygon
• TRON.

Crypto wallet development

A cryptocurrency wallet is an application or program that makes it possible to interact with a blockchain: check balances, view transaction history, receive and send transfers. The latter refers to the transfer of rights to cryptocurrency from one user to another, because in reality it is always in the blockchain and simply changes ownership.

A crypto wallet is similar to a bank account, only designed for cryptocurrency transactions. It shows how many coins you have at your address, where they were received from, where they were sent to. Multicurrency wallets display the exchange rate of coins to other cryptocurrencies and allow you to exchange them.

We develop the main types of crypto wallets:

• Custodial and non-custodial
• Web, mobile, and desktop.

Development of cryptocurrency exchanges and P2P platforms

A cryptocurrency exchange is a trading platform where coins, tokens, and stablecoins are sold, bought, and exchanged. It brings buyers and sellers together, ensuring the reliability of deals. The crypto exchange operates on a trading engine that checks the placed orders for asset security, keeps records in an order book, and prepares data for display in a web or mobile app.

A P2P platform is a service where buyers and sellers of cryptocurrencies interact directly, without the mediation of a third party. It only matches ads, pre-checks and rates their creators, as well as provides escrow accounts. Unlike crypto exchanges, where there are strict rules and requirements, P2P platforms are more loyal to users.

We develop cryptocurrency exchanges and P2P platforms from scratch, as well as introduce additional sections and products into existing services:

• Portfolio for crypto assets
• Launchpad for crypto projects
• Native token and stablecoin
• Referral programme.

Smart contract development

Smart contracts are used for those activities where automatic fulfilment of obligations by the parties is possible without human involvement and evaluation. A smart contract independently monitors whether certain conditions specified in it have been fully fulfilled. And the protection of its code from interference is provided by blockchain technology. That is, no intruder will be able to change the lines of code — the terms of the contract concluded by the two parties.

Decentralized apps are created on the basis of smart contracts. Smart contracts together with blockchain ensure the fulfilment of obligations on cryptocurrency products, make them reliable, and provide a secure payment system for cryptocurrencies.

We develop smart contracts that are used for:

• Issuance of tokens and algorithmic stablecoins
• Oracles and prediction markets
• Staking and farming
• Decentralized exchanges and automated market makers.

DeFi project development

Decentralized finance was first referred to as analogues of traditional financial instruments that are implemented in a decentralized architecture. Now they have grown into a publicly accessible ecosystem consisting of decentralized apps on blockchains.

The goal of DeFi is to create a financial system that is open to everyone and doesn’t require trust from users, as well as to promote the principle of self-sufficiency. Conservatives consider this principle as a flaw, but it is accustomed to taking responsibility for DeFi investments.

Here are the popular types of DeFi apps we develop:

• Algorithmic stablecoins
• Decentralized exchanges
• Decentralized autonomous organizations
• Liquidity pools
• DeFi lending platforms
• DeFi insurance platforms.

Security audits

Compliance with high security standards and resistance to DDoS attacks is a cornerstone of blockchain services. There have already been hundreds of cases where attackers either permanently disabled services or stole coins worth millions of US dollars.

If you operate a blockchain service, then security is the first thing you need to take care of. We will audit your service, identify vulnerabilities, and help you protect them.

The cost of blockchain projects

Customers often ask us how much it will cost to develop a project using blockchain, and usually their entire project description fits into a couple of paragraphs. Of course, it is impossible to estimate the cost of project development based on such little information. But we can give approximate guidelines for the cost of blockchain projects:

The exact cost of the project can be calculated if we make detailed terms of reference. Within its framework, we would already be able to estimate the number of hours that will be required to develop a blockchain project, and to calculate the total cost by multiplying the number of hours by the rate. The average rate of blockchain developers is $50–70 per hour, but in some cases it can reach $100.

The development of successful cryptocurrency projects capable of making their creators wealthy and famous involves teams of diverse specialists who work shoulder to shoulder to achieve the common goals. Let’s tell you how to create a cryptocurrency and get through the major phases you can’t blow over.

Typical crypto project components

Crypto project concept and white paper development

Just as the construction of a solid house starts with design, the cornerstone of creating a new cryptocurrency is the concept. It’s the white paper with a detailed description of your idea, which will convince the investors that the demand for your coin or token will grow. This is the most complex document as it takes extremely long to draw and work out. Working on the concept usually covers the following:

• Selecting a base coin for a fork or a smart contract concept for a token
• Forming cryptocurrency characteristics
• Formalising the legal framework of the coin
• Describing product specifics and values
• Planning the initial offering
• Outlining a roadmap, i.e. the project development plan with key milestones on the timeline.

Legal matters

The most important development phase is forming the legal concept of the coin. It will help avoid many problems with regulatory authorities, including prosecution by the SEC and initiation of a criminal case. You will need to register legal entities, draw up legal documents (including the Legal Opinion), and open bank accounts.

Technological matters

At this development phase, the entire technological framework, engine, crypto wallets, promo website, and personal account are created. Here you need to decide whether it will be a coin with its own blockchain or a token on popular blockchain platforms (Ethereum, Cardano, TRON). We have written about the key differences between these approaches below.

Token sale or initial offering (ICO, IEO)

The initial offering of a coin or token to the investors. The ICO development implies creating the investor account and large marketing costs aimed at attracting investors. This stage includes cryptocurrency promotion, advertising, and forming a community. You should run a blog on your website or social media channels. The fund generation volume depends on skilful marketing management. Conducting bounty campaigns also catalysed the coin’s evolution and popularity.

Since 2019, there has been a demand for initial exchange offerings (IEO). Generally, this event is handier as it doesn’t require creating an investor account, carrying out KYC verifications and other procedures as all of it falls within the crypto exchange’s responsibility. However, you will have to pay it for the IEO service. At the same time, exchanges set very severe requirements for candidate projects.

Getting listed on crypto exchanges, market making

Being present on 2–3 crypto exchanges where trading will be launched is one of the cornerstones of successful development of your cryptocurrency. At the very beginning, the trade volume may be poor or even zero. In this case, startups resort to market makers. By the way, Netside also provides market making services.

Cryptocurrency development costs

Legal and financial matters

Financial regulatory authorities of states seeking to streamline the cryptocurrency sector have already developed guidelines that prescribe the classification:

• Swiss Financial Markets Authority (FINMA) — February 2018 version
• The US Securities and Exchange Commission (SEC) — April 2019 version
• The UK Financial Conduct Authority (FCA) — July 2019 version.

Despite some terminological differences, those authorities divide cryptocurrencies into three types:

1. Payment tokens (FINMA) / coins (SEC) / exchange tokens (FCA). These are cryptocurrencies with their own blockchain technology, such as Bitcoin, Dogecoin, Ethereum, Litecoin, and other altcoins. Some countries have already recognized them as a means of payment, others only consider them as a digital asset. However, nowhere are coins classified as securities and don’t need to be registered for issuance. This type is, after all, designed for payments, not for receiving yield or rights by stakeholders.
2. Utility tokens (FINMA, SEC, FCA unanimous). They give access to a decentralized app or service, usually only within a project that issued them. Resemble a virtual currency used in games or on social media. The only difference is that the prices of such tokens are determined not by the issuer but by supply and demand in the market. Although the issuance of utility tokens is not subject to any legal difficulties, one should always be ready to prove to a regulator the applicability of such tokens in an operating service; otherwise, they will be recognized as investment assets.
3. Asset tokens (FINMA) / security tokens (SEC, FCA). Their holder can claim a share of the company’s profit or participation in its management. This type of tokens has characteristics of securities, and in most countries the unregistered issue and sale of securities or their analogues is considered a financial crime. Registering the issue and initial offering of security tokens is a long and effort-consuming process.

The UK FCA has an additional condition regarding stablecoins: if they are backed by fiat assets or a basket of crypto assets, they may be recognized as electronic money. That said, they will be placed alongside fiat currencies of electronic payment systems such as PayPal and Worldpay. This causes even more confusion, especially because stablecoins are not actually coins (despite the ‘-coins’ in the word) but utility tokens.

Beware of the SEC

A proper concept and knowledge of the specifics of different jurisdictions are advantages that may help avoid a ton of problems. Issuing tokens in the United States or for the US market, be ready to become a target for the Securities and Exchange Commission. Below is the list of companies and their cryptocurrencies that have been involved in SEC-initiated litigation for H1 2023:

Cryptocurrency development technology

Unlike regulatory authorities, developers only divide cryptocurrencies into coins and tokens, depending on the availability of a blockchain.

Coins (blockchain projects)

A coin is a cryptocurrency created from scratch and based on the dedicated blockchain, or using a fork of an existing coin, e.g. Bitcoin or Ethereum. Also, there is the term ‘altcoin’ (alternative coin) which means any cryptocurrency besides Bitcoin that had been the only blockchain-powered cryptocurrency until 2011.

Top 5 highest-capitalization coins (July 2023)

In addition to a blockchain, such crypto projects have a network of full nodes to support the protocol running, a tech team, and a community of users.

Netside’s experienced developers have already crafted 11 coins of different complexity and are now working on two new coins. To create a cryptocurrency, we take a relevant source code, make the necessary changes, and compile it. As a rule, cryptocurrency development process consists of 5 stages:

1. Terms of reference for the development of a system.
2. Compiling the coin core and wallet for Windows/Linux.
3. Deploying two primary nodes.
4. Creating a block explorer and mining pool.
5. Compiling mobile wallets for iOS and Android platforms.

Tokens (utility and security)

A token doesn’t have its own blockchain and supporting nodes but uses a third-party coin’s blockchain. Most often, Ethereum’s blockchain is chosen to create tokens, though this function is provided in various blockchain projects, e.g. BNB Smart Chain, TRON. Despite the fact that tokens are used as an internal currency or a means of access to a decentralized app/service, first investors try to purchase them for further reselling on crypto exchanges.

Top 5 highest-capitalization tokens (July 2023)

To create a token, we need to craft a smart contract and embed it in a blockchain. Take into account the peculiarity of ERC tokens on Ethereum: any operation there, whether issuing or transferring tokens, consumes gas (network fee) which costs a certain amount of ether. Thus, to make a transaction, the sender must have not only ERC tokens in their wallet but also ETH coins. And this is not always that convenient.

The development of a smart contract takes from one week and costs $1000–5000. The integration with web services and web wallet, as well as further token offering, are being worked out separately.

Our developers have 4 years of experience in both programming smart contracts for tokens and creating blockchain-powered coins. Contact us on Telegram to learn more about turnkey cryptocurrency development.

Cryptocurrency website

You will need to build a website that will clearly convey the value of your project to potential investors. What most projects stay with is a one-page structure which comes in very handy for awareness purposes. The main website and white paper language is English, but there are also often versions localised into 3–5 common languages. The website usually contains the following:

• General project info, white paper.
• Development team (5–7 key members). The more professional the team looks, the more funds you will be able to raise.
• Links to social channels or profiles (Twitter, Telegram, Facebook, Medium, LinkedIn). Most success factors depend on skilful community management.
• Section of investor personal account.
• Links to download a desktop, mobile, or web wallet; it is better to have all types at once.
• A list of exchanges and open markets where people can purchase your new cryptocurrency.

What an ICO is

An initial coin offering is an event during which a token or coin is presented to investors. Simply put, it is the issuance of a specific number of tokens or coins and an attempt to convince future investors to buy them for a more liquid cryptocurrency (e.g. BTC or ETH) at the price set by the creator. Quite often, ERC tokens are used in this context, as it is easy to program and deploy smart contracts in Ethereum.

Getting listed on exchanges

Once you have issued a cryptocurrency and sold some through your website, you may wonder where people will trade the new coin and how to expand the audience. To get new investors and traders interested and involved in active trading, you need your crypto to be listed. Before listing, the exchange will ask you to get through preparatory procedures:

1. Your project must have a live community with communication channels (e.g. Facebook, Telegram, Twitter, etc.).
2. You have to pay for the listing service, which costs from $1000 for little-known exchanges to $500,000 for popular ones. Moreover, popular exchanges want to add coins of only those projects that prove their worthiness.
3. You have to provide the experienced team that will integrate your project with the exchange.

Initial Exchange Offering (IEO)

Since early 2019, the initial exchange offering has begun to conquer the crypto market. At the same time, ICO and traditional listing haven’t gone anywhere, an alternative solution for cryptocurrency developers has just appeared. IEO is considered a hybrid of the ICO and listing, or a token sale held immediately on the crypto exchange. Here you only need to cooperate with a proper crypto exchange. Crypto project developers find many advantages in this model:

• The website doesn’t need to have investor accounts
• An exchange has a base of loyal users
• Traders and investors rush to buy a new cryptocurrency verified by the exchange
• An exchange acts as a partner in promotion, announcing the project on its channels
• The market entry and sales of developed cryptocurrency are accelerated.

For example, here are the top 15 most successful tokens that have ever held an IEO (as of July 2023):

Besides the ICO and IEO, there are other innovative solutions to facilitate cryptocurrency offerings: Security Token Offering (STO), Initial Airdrop Offering (IAO), Initial Fork Offering (IFO), Initial Miner Offering (IMO).

Want to get into all the nuances? Submit a request and we will explain everything in detail. Then together we will work out a strategy for developing a cryptocurrency from scratch and offering it on exchanges!

The first thing that comes to mind is something from law, some kind of smart contracts, which are monitored by an algorithm and probably can’t be violated. The second thing you might think of is the future of transactions: soon they will only be concluded through smart contracts. Let’s see if that is really the case.

What a smart contract is

A smart contract is a computer algorithm designed to help conclude an agreement, monitor fulfilment of a contract, and execute the obligations. Created in code, it is only executed on a blockchain, a distributed ledger controlled by a decentralized network of peer nodes.

As you might have guessed, this process has nothing to do with conventional deals. You can’t use a smart contract to buy a car or secure the supply of a carload of wheat. But you are free to exchange one token for another without any intermediaries, or deposit a token at interest with a crypto bank.

In the real world, contracts are concluded on paper or electronically, with the use of the digital signature. Contract fulfilment is monitored by the state, and disputes are resolved in court. There are some mentions on the web of people selling an apartment or another asset using a smart contract. But such information is nothing but deception.

Like offline, where contracts are regulated by certain countries and jurisdictions, a smart contract is only valid on the network where it is written and deployed.

It’s easier to grasp this with the example of a vending machine. One user puts stamps into the machine, the other puts seashells. The machine uses the exchange rate of 2 stamps per seashell. Both users trust the machine since its source code is public and everyone can read it.

How smart contracts emerged

The idea and the term ‘smart contract’ were coined by Nick Szabo in 1994. He described a smart contract as a cryptographic protocol that conducts and monitors contracts using a set of algorithms.

Smart contracts saw broad application in practice with the emergence of Ethereum. In 2013, the future project founder Vitalik Buterin realised that Bitcoin’s protocol was unusable for smart contracts because it had been designed for other purposes. So he decided to create a different protocol from scratch, which could be more relevant to the task.

Smart contracts help close deals and perform transactions according to pre-established rules, without any intermediaries. Blockchain makes such transactions transparent, traceable, and irreversible.

Where smart contracts are used

Applications based on smart contracts deployed on blockchain networks are called dApps (short for decentralized apps). Blockchain-based smart contracts enforce obligations on crypto projects, make them more secure, and provide a safe payment system for cryptocurrencies. Oracles play a key role in creation of next-gen smart contracts that provide fintech products and monetary instruments (e.g. market data-driven ones).

• Token issue. Perhaps the most popular use case. Hundreds of examples available in the public domain is what makes issuing tokens easy and accessible to everyone.
• Decentralized exchanges. DEXs are blockchain-based exchanges that allow trading tokens without the need to store them with centralized companies. Among the shining examples are Uniswap, PancakeSwap, SushiSwap, Polyx DEX. The most common type of DEXs is automated market makers. They are on-chain liquidity pools that exchange tokens by a specific formula rather than using the order book. They help traders access liquidity, and liquidity providers get passive income.
• Staking. Staking is a process of providing cryptocurrency as a stake in a contract. Protocols use it to ensure efficient tokenomics. With such a method, it becomes apparent where, how, and in which proportion the staking rewards should be distributed. They can also be slashed (automatically withdrawn) in some cases.
• Farming. This innovation emerged in the DeFi ecosystem and is used there to retain liquidity and distribute governance tokens evenly between users. Most DeFi projects offering farming reward liquidity providers with native tokens that fund protocol development.
• Algorithmic stablecoins. What makes them similar to centralized and decentralized stablecoins is that they are also backed by fiat money, cryptocurrency, or any other asset. But here is the difference. Algorithmic stablecoins maintain the equivalent of pegging using automated rewards and fines. If the price falls below the pegging level, excess tokens are burned; if the price gets higher than the pegging level, extra tokens are issued.

How to create a smart contract

Let’s examine how smart contracts are created with the example of Ethereum, the most common blockchain platform.

First, we need to work out the smart contract’s logic and write the source code. Developers use Solidity, a language that is somehow similar to JavaScript. The code can be written in any integrated development environment, but Remix Online IDE is the most widespread one. It allows designing a smart contract, compiling it, and placing it on the network.

After compilation is complete, we need to deploy the code on the network. For that, we create a special transaction, and the deploying address pays a fee to the network (the fee currency is ETH in our case). The more complex the smart contract, the higher the fee.

If all goes well, the deployment transaction will be executed in one of the blocks and the smart contract will end up on the blockchain with a unique address. After that, it will be able to receive commands.

How much it costs to develop a smart contract

The price of a smart contract depends on its complexity. For example, creating a simple smart contract for issuing tokens costs 1000–5000 USD, while development of sophisticated dApps starts from 10,000 USD and may cost over 100,000 USD.

We at Netside have been doing blockchain development for 4 years. For this time, we have designed around a hundred smart contracts of different complexity. Contact us on Telegram to discuss how advanced a contract your crypto project needs.

What a smart contract audit is

A security audit is an independent examination of a smart contract’s code that projects usually publish on GitHub. Audits are a must for DeFi projects and dApps whose numerous users transact millions of dollars. Usually, an audit consists of the following stages:

1. Auditors conduct an initial review of contracts.
2. Auditors submit the review results to the project developers for further action.
3. Project developers make changes and fix the errors found.
4. Auditors draw up a final report considering the changes made and remaining errors.

Auditing is a common process for large crypto projects. Most investors take into account the audit results when studying new DeFi projects. And they have more confidence in reports compiled by reputable audit firms.

Why a crypto project may need an audit

Smart contracts help transact or block gigantic amounts of cryptocurrencies. And this can be a big prey for hackers. Even tiny code errors may lead to a project losing millions of user funds. For example, a hacking of The DAO resulted in the theft of $50 million worth of ETH and Ethereum’s hard forking.

A project team needs to make sure the code is secure, since transactions on the blockchain can’t be reversed. The specificity of the technology won’t allow their cryptocurrency to be recovered, nor solve problems after a hack. This is why it is critical to find all vulnerabilities beforehand.

Purposes of smart contract auditing

Auditing helps achieve a variety of goals, including:

Finding and fixing vulnerabilities

Auditors check smart contracts for various downfalls. Some are found immediately, but most can only be identified with the use of special techniques and tools. For example, during market manipulation, a vulnerable smart contract may be attacked with flash loans. To find such bottlenecks, auditors try to hack a smart contract. Here are the most common types of attacks they imitate:

• Recursive call. A contracts another, external contract, before committing changes. After that, the second contract can recursively interact with the first one in an invalid way, since the balance of the first one hasn’t been updated yet.
• Front running. When the execution of a contract depends on its position in a block, one can push a transaction forward in the queue by overpaying for gas and thus unfairly win auctions, lotteries, and games.
• Integer overflow. When a contract performs an arithmetic operation, the value may exceed the storage capacity, resulting in an incorrect calculation of amounts.

Addressing security errors

Auditors also examine the network that hosts the smart contracts and the application programming interface (API) used to interact with dApps. If it turns out that the project can’t withstand a DDoS attack or its API is compromised, it will be unsafe for users to connect crypto wallets to potentially harmful blockchain apps.

Optimizing gas expenses

On top of analysing blockchain security, auditors look at how optimized and efficient smart contracts are. Seasoned blockchain developers try to optimize their performance. But inexperienced enthusiasts may neglect optimization.

Some smart contracts need to send a series of transactions to be executed. Given that gas fees are high on networks like Ethereum, efficient smart contracts could help save on transaction fees. And if they are inefficient, expensive gas could disrupt their operation.

How smart contracts are audited

A security audit is a common service. And though different audit firms may employ different approaches, here is a typical plan most of them follow:

1. Determining the scope of work. Contract specifications depend on the project’s purpose and architecture. They help auditors find out which goals developers pursued when writing the smart contract.
2. Estimating the audit cost based on the scope of work.
3. Carrying out the audit. The techniques and tools used vary from company to company. Both automated and manual examination methods can be used.
4. Drafting a bottleneck report. It’s then submitted to the team for troubleshooting.
5. Drawing up a final report describing action taken by developers to fix the problems found.

What an audit report is

A report is submitted at the end of the audit. In most reports, problems are categorised by severity: critical, major, minor, trivial. The problem status is also indicated, and is updated in the final report if the team had managed to fix the related error before the final report was drawn up.

Besides general takeaways, the report contains recommendations, code error review, and examples of inefficient code. When the project team receives the final report, they can publish the full version or the key findings in the community.

How much it costs to audit a smart contract

The audit cost depends on the number of smart contracts to be reviewed. On average, an audit costs 2000–3000 USD. In a more complex case, it can cost over 10,000 USD. Another factor affecting the cost of service is the reputation of the audit firm.

Netside is respected in the market. But we don’t think our reputation should be reflected in our rates. Send us a request to find out how much an audit will cost you.

The development and use of decentralized finance leads to destruction of the traditional model of the financial system, which has always had shortcomings. In the new model, financial processes will work more efficiently thanks to smart contracts. In transparent transactions that are verified and executed independently, there will be no room for intermediaries and fraudsters. The next step in the financial technology revolution that began in 2008 with the advent of blockchain technology has arrived.

What DeFi is

Decentralized finance started to attract attention after all markets crashed in March 2020, but few people understand its essence so far. At first, the term was used to refer to analogues of traditional financial instruments that are implemented in a decentralized architecture. Now they have grown into a widely accessible ecosystem consisting of decentralized applications (dApps) and services powered by public blockchains.

The goal of decentralized finance is to create a financial system that would be open to everyone and wouldn’t require user trust, as well as to promote the self-sustainability principle. Conservatives consider this principle a disadvantage, but it encourages people to take responsibility for their investments.

The difference between DeFi and FinTech

Decentralized finance seems similar to financial technology (FinTech) that is also aimed at modernising financial services. However, the difference is that while FinTech relies on a conventional financial infrastructure, DeFi offers completely new components.

Let’s recall, for example, TransferWise, a fintech service for international payments. Though its fees are several times lower than those of most banks, it still uses bank accounts and other infrastructure elements that may have become obsolete. With bank accounts in many countries, TransferWise makes it easy for customers to transfer money. When you send euros to someone living in another country, such fintech services capture your money, and to the recipient, they give the funds from the corporate account in the recipient’s country. This speeds up transaction processing and reduces fees.

Now let’s compare the above model with DeFi services, for example, Dai transfers. Instead of centralized intermediaries such as banks or fintech companies, Ethereum stakers verify Dai transactions. They will process your transaction for an amount equalling one US dollar, and this will only take 15 seconds — the period required to create one block in which verified transactions are recorded. As a cherry on top, you can send your Dais to anyone who has a wallet that supports ERC-20 tokens. Your recipient can receive them in 15 seconds, even in a country under sanctions or with an outdated financial system.

Where DeFi is used

Decentralized finance is an accessible alternative to most traditional financial services, allowing anyone who has an internet connection and some awareness of cryptocurrencies to interact with the DeFi ecosystem. For that, developers have created a hundred new blockchain projects with their own protocols, distributed networks, decentralized services, and dApps.

When we take on DeFi, we start with the terms of reference for the project development. Without detailed ToR, we won’t be able to evaluate and start creating your future DeFi project.

Stablecoins

Decentralized finance first started to be used in stablecoin projects. This is a cryptocurrency, the price of which is pegged to the price of a reference financial instrument (usually fiat currency or commodity). Thus, all the issued stablecoin units are backed by a reserve stored at a reliable custodian. The value of the USD-pegged stablecoins is ensured by the issuer, while their purchase and sale are subject to AML/KYC procedures.

Examples of DeFi projects with stablecoins: Liquity USD (LUSD), USDD, Wrapped Bitcoin (WBTC). The latter is pegged to the price of bitcoin, but is powered by the Ethereum blockchain.

Decentralized autonomous organizations

Another type of crypto projects often associated with stablecoins are decentralized autonomous organizations (DAO). Amongst them, MakerDAO, which operates on Ethereum, is considered the most popular. Although it has a native stablecoin DAI, any participant can issue their custom stablecoins. Their issue can be compared to the issue of fiat money backed by gold, only here ether is used instead. A participant sends a certain amount of ETH coins or approved ERC-20 tokens to a smart contract that creates a new stablecoin. This is called collateralized debt positions, meaning that the created DeFi tokens are basically a collateral-backed debt payable to MakerDAO.

A team of any crypto startup can establish its own DAO. It’s not much more difficult than developing and deploying a smart contract. There’s even such a platform, DAOHaus, which allows you to create a DAO on the open-source framework Moloch. It helps DAO members and founders to reduce coordination expenses to zero.

Decentralized exchanges

Thanks to DeFi, decentralized exchanges (DEX) regained their popularity. Unlike centralized ones, DEXs don’t store users’ crypto and data on their servers. Operating on a blockchain, they only bring together buy and sell calls. Such a trade model helps avoid KYC procedure and doesn’t depend on the interests of major traders.

Here are a couple of interesting and not quite ordinary DEXs:

• Uniswap — both a DEX and an Ethereum-based decentralized protocol that provides liquidity and simplifies token exchange thanks to automated market making
• 1inch.exchange — an aggregator of various DEXs that divides an order between non-custodial exchanges to minimise slippage and find the most favourable price for order execution.

Prediction markets

P2P prediction markets have captured a separate niche. These are platforms that allow placing bets on various events, activities, prices, elections, etc. There are similarities here with usual bets, for example, in sports betting, so the principle doesn’t need much explanation.

Here are the most famous prediction markets:

• Augur — a platform for creating P2P prediction markets and an Ethereum-based decentralized oracle. Its collective intelligence (the wisdom of the crowd) predicts the outcomes of upcoming events on which the users can place bets.
• Gnosis — a platform with 4 products: Conditional Tokens (a framework for creating event-based tokens); Protocol (a DEX with round trips maximising liquidity); Safe (a wallet for digital assets); GnosisDAO (a DAO that manages the platform and prediction markets).

DeFi services

Apart from stablecoins, DAOs, DEXs, and prediction markets, there are 6 other fields of decentralized finance:

1. P2P lending.
2. Decentralized insurance.
3. Issuance of synthetic assets.
4. DeFi asset storage and management.
5. Liquidity pools.
6. Marketplaces.

As worthy examples of decentralized finance in the form of services successfully operating in these fields, we would like to highlight the following:

What the advantages of DeFi development are

Today, DeFi projects attract almost as much attention as IEO in 2019. So why is there such hype around them? What role does decentralized finance play for participants and organizers, what advantages does it provide?

Decentralization

The main advantage of DeFi is true decentralization. The rules of financial operations are prescribed in a smart contract, and once it is launched, the project can operate independently. Control over it is distributed amongst many independent participants, while the development team is deprived of the ability to manage it centrally.

Public accessibility

DeFi companies help people who previously couldn’t use financial services to join the global economy. Until now, 1.5 billion people don’t have access to basic banking services such as deposit accounts and loans. The main reason for this omission is that many unbanked people don’t have all the documents that financial institutions ask for. It’s also hard for them to get a decent credit score. Now residents of developing countries can enjoy financial benefits without intermediaries.

Transparency

In the DeFi sector, all information is open and available for familiarisation, allowing you to choose reliable projects and services from home. If you need a loan in real life, you have to go to banks, compare interest rates, and study confusing terms and conditions, so as not to face hidden fees or penalties later. In the case of decentralized finance, detailed information about lending protocols and terms is available in projects’ white papers.

Finance is under control

On DeFi platforms, only participants themselves manage their assets. They control their cryptocurrencies in decentralized services and organizations without outside help or interference. No regulator can freeze the accounts of dApp users or confiscate their funds.

What benefits DeFi developers offer to businesses

Any financial institutions, fintech companies, or crypto projects can connect to decentralized finance to benefit their business. For example, we suggest you get:

• A potential source of yield from unused fiat or cryptocurrency reserves
• Easy access to capital through lending protocols to fund business operations
• Reduction of costs and elimination of intermediaries due to the use of blockchain technology
• Automation of processes and reduction of errors due to the implementation of reliable smart contracts
• Attractiveness for potential investors due to the diversification of their investments through cryptocurrencies.

Cost of services

If you need a unique DeFi solution, we are ready to create it. Netside develops DeFi apps of any complexity. Contact us to discuss all the details, and we will start working on your project right away.

However, the proliferation of mobile phones made online banking not as handy as it used to be. Today’s bank clients want to make transactions with their smartphones — by contrast with computers, they are always at hand. This is how the era of mobile banking—initially called SMS banking—began. First prototypes of mobile banking systems appeared as early as in the late 1990s when banks offered their customers SMS-powered services.

Every modern smartphone allows extended access to the bank account, at any time and place. Neither of other remote service methods could provide such an opportunity. The UK market study showed users check their account with their smartphones three times as often as they do it using computers. We see that mobile phones transformed into smartphones and tablets found their place in the market: eventually, these two trends changed mobile banking.

Yesterday’s mobile banking types

Every contemporary banking organisation has and needs to offer mobile banking services, namely:

SMS banking

Basically, SMS banking enables users to manage their accounts by sending text messages to a bank’s dedicated number. Usually, service messages have standard templates to follow. Though this method could seem trivial and weak, it works brilliantly in places where one has no LTE or Wi-Fi available. Moreover, as SMS networks allow faster notifying customers of actions with their accounts, banks prioritise this type of communication.

Mobile online banking

Remote access to the account via the mobile-compatible version of the bank website. Essentially, this is the same online banking but tailored to smaller screens. As long as mobile layouts imply simpler and less loaded UI, such versions can be limited in functionality. And if the bank tries to provide full-power controls, some functions can be put away so safely that users will have to crawl across the website and tons of submenus to find them.

Basic mobile banking apps

Nothing-extra smartphone apps for mobile operating systems (Android/iOS/Windows Phone). Initially, banks rolled them out as marketing tricks to impress clients with a diversity of tools. And though basic applications could not give users the free rein in managing their accounts, they were fitted with essential capabilities:

• Mobile payments and transfers between bank clients
• Loan, overdraft, mortgage applications (including repayments)
• Currency operations
• Ordering debit, credit, and virtual cards
• Opening/closing deposits.

Such applications were unpretentious and still, they offered a better notification system than text-message banking, and individual advisory services (what online banking lacked). By using applications, banks could reduce spending related to text messaging and call centres.

We hope that every bank offers a branded app today. But if your bank doesn’t have one yet in 2023, then contract us to develop a mobile banking app. Netside team is ready to start with the terms of reference for the app development right now.

Today’s mobile banking

The fourth and still relevant type includes modern apps with advanced functions. Though they are basically the same apps installed to smartphones, they are by far more advanced. Just like the web transformed from the information-storing vault into a pocket world for communication, entertainment, blogs, social media, etc., banking services transitioned from the motto ‘come to the office if you need help’ to the we-are-here-to-serve-your-financial-needs concept.

Not only connection evolvement, higher device productivity, and ideas from other industries influenced the modernisation of banking apps — the everlasting fight for the client also contributed to the process. People of today’s generation don’t want to go anywhere, they hate queues, disregard paper money and change. Moreover, they can earn money easily, spend or save them fast, and heavily rely on auto payments; the only thing they need to do all that is a smartphone… and a trend-tuned bank that provides fresh solutions both to individuals and organisations interested in new products.

The bank serves customers, we serve the bank

The bank, in its turn, needs a developer team who could implement such competitive solutions in software. And this is what Netside can help you with. We are ready and fully armed to develop mobile banking apps with any-complexity functions — from typical as mentioned above to specific, namely:

• Smart autopayments
• Transferring money to other bank clients by phone number
• Handling cards and accounts of other banks
• Electronic payment system support
• Cashback, interest-bearing accounts, bonuses
• Investment account opening and management
• Extended transaction history, account/card statement, data export
• Nearest ATMs and offices
• Contactless payments
• Transactions and services previously available in offices only.

It should be noted that the functionality is not the only imperative. UI and UX are also significant features: the interface has to be friendly and intuitive, operation speed high, and bank response fast. Another way to win more client loyalty is to offer push notifications and support chats. But what if your customers are well aware of all these features and you need something special? Well, then we need to develop a…

Tomorrow’s mobile banking system

Cutting-edge technologies are what can let you hold your position in the banking market and provide your audience with superior and unique service. Having installed your brilliant app once, both individuals and organisations will be your long-standing customers. We can create a mobile app from scratch or complement an existing app with new future-hit features:

1. Barcode/details scanning for payment.
2. Biometric authentication.
3. Voice-controlled payment templates.
4. AI-driven chatbots.
5. Robotised financial advisor.

This is not a complete list of what we can do for you. To learn more, please submit a request. We are highly experienced in working with blockchain, artificial intelligence, and machine learning, so we can integrate these advancements into your system. Netside is ready to endorse any of your ideas and put them into effective action in the application.

The cost of developing a basic mobile banking app starts at 20,000 USD. The cost of creating a mobile banking system starts at 50,000 USD.

As e-commerce evolves, various electronic payment systems are developed and their functionality extended. They have already become an integral part of our life — somewhat of an interface for online deals. Payment systems working with electronic money are considered the most handy way to perform financial transactions.

Electronic payment systems (e-payment systems) allow the following:

• Paying utility bills, taxes, and fines
• Paying for cable TV, Internet, and mobile services
• Making purchases in online stores and games
• Transferring money to other users
• Currency exchange
• Repayment of loans
• Depositing and withdrawing money through bank accounts and cards.

With that, e-payment systems ensure high transaction speed and relieve us from the necessity to count up and fumble with change. Such advantages are beneficial not only for users but also for service providers and sellers.

Electronic payment systems popular in Europe

The world knows a plethora of heavily-used e-payment systems. Here are some of those that had spread and become widely-known in the United Kingdom and Europe:

1. Worldpay. Founded in the UK in 1997. 400 thousand corporate customers across 146 countries. 126 currencies supported. Worldpay Inc. earns on transaction fees (0.75–2.75% of the transaction amount) and monthly fees (£19.99/month).
2. PayPal. Founded in the US in 1998. 200 million users across 202 countries. 25 currencies supported. PayPal Inc. earns on fees: 3.9–5.4% of the transaction/payment amount.
3. Neteller (Canada, 1999) and Skrill (UK, 2001) were e-commerce rivals, currently owned by Paysafe Group Limited. Neteller supports 28 fiat currencies and 9 cryptocurrencies; counts 31 million users across 200 countries. Skrill handles 40 fiat currencies and 9 cryptocurrencies; serves 36 million users across 200 countries.
4. Stripe. Founded in the US in 2011. Counts 4 million users across 23 countries. Supports 100 conventional currencies and Bitcoin. Stripe Inc. earns on fees based on the transaction amount: 2.9% for credit/debit cards, 3.9% for internationally-accepted cards.

This list will soon be updated by your e-payment system. Or have we not created it yet? Let’s start now with the first stage — the terms of reference for the system development.

Why create your own electronic payment system

The key purpose of any payment system is handling money. On the other hand, e-payment systems are designed for processing financial transactions online. Their core is technical procedures that enable users both transfer funds between each other or to organisations.

Every proprietary e-commerce payment system is primarily developed to serve specific tasks and activities. Tasks such a project can tackle are diverse as most transactions today are executed over the Internet. In terms of executing cashless payments, this method is the simplest as the connection to such a system automatically eliminates the bulk of any imaginable red tape. The method also combines the work of several companies: supervision, payment processing terms, and other processes are managed by the payment system itself rather than third parties.

Having developed your own e-commerce payment system, you will provide your users with the following benefits:

• Easy payments for any products and services with electronic money (highly demanded by individuals).
• Remote access for any-time transfers (unlike traditional banks that don’t know what it is to work 24/7).
• High transaction speed: it just takes a few seconds to process a payment (bank payments need several hours to several days).
• Simplicity and accessibility: anyone can register in a couple of steps and start using your system in a jiffy.

Online stores and e-commerce entrepreneurs will be able to expand their enterprises and attract more clients with introducing a new handy payment method.

As the e-payment system owner, you will get:

• Finely-organised payment acceptance
• Effortlessly-configurable rate scales and fees, separate for companies and individuals
• Complete control over the circulation and cash flows within the system
• Plastic card issuance (with recurring service charge).

Let’s develop an electronic payment system for you

Our company is ready to develop an e-payment system of any complexity on a turnkey basis. Rest assured that we can steer any complexity and lay the basis for any grade of scalability. We can understand what your business needs, tailor our solution to your specifics and requirements. Also, we will provide you with Android and iOS mobile apps — both administrator apps (for access to the database and service panel) and user apps.

The cost of creating an electronic payment system starts at 50,000 USD. The cost of developing mobile applications in addition to EPS starts at 20,000 USD.

Netside will assign a whole team of designers, front-end and back-end developers to your project. This will speed up the process of developing and testing a system. Such an approach enables us to release products on time and follow the pace of your desire. To learn more, please submit a request.

Most influencers have spent months building their army of fans. This is why their fans are very loyal to what their opinion leader says.

You must have come across some Internet influencers amongst YouTube, Instagram, and Twitter bloggers that see millions of readers and viewers. But have you ever thought that these popular people could advertise your product to their followers? If you haven’t, you might be missing out on an easy start.

Influencer marketing has become an integral part of fintech marketing without which it is barely possible to promote a product amongst the general public. We will tell you how it can benefit your company.

What influencer marketing is

Advertisers used to partner with offline celebrities. But in the digital world, content creators with specific audiences can deliver higher value to brands than advertising from any global celebrity of yesteryear. Even small social media profiles have thousands of active followers, let alone those with millions of devotees.

One of the earliest cases of such marketing was a campaign for horror film ‘As Above, So Below’ with YouTube blogger PewDiePie. Together with the creators of the film about French catacombs, he made a series of videos in which he took challenges in terrifying places. That was perfect content for 27 million followers (as of 2014; today, PewDiePie’s follower count has passed 111 million). And the blogger saw twice as many views as the film trailer. The campaign was a complete win-win, for PewDiePie and for the film.

This shining example helps us define influence marketing as a way to advertise a product or a brand with the help of respected bloggers or opinion leaders famous on YouTube, Facebook, Instagram, Twitter, Telegram, and other platforms.

Influencer marketing implies that you cooperate with high-impact bloggers. Why them? Just because they serve broad—and loyal—audiences and thus can affect opinions. This is why companies pay them for promoting products or services.

What you should know about influencer marketing

• In 2022, spend on influencer marketing reached $16.4 billion.
• Companies earn $5.2 from each dollar invested in influencer marketing.
• For 2021, 75% of marketers in the U.S. actively used influencer marketing to promote brands and products.
• In 2021, platforms utilising influencer marketing attracted $800 million in investment.
• In just one day in October 2021, popular Chinese streamers Li Jiaqi and Wei Ya sold $3 billion worth of merchandise. That’s three times Amazon’s average daily sales volume.
• In 2021, Netflix was the most popular brand on TikTok.
• Over the past 5 years, 1360 platforms and agencies have entered the influencer marketing market.
• Since 2016, the number of searches for ‘influencer marketing’ on Google has increased by 465%.
• 80% of brands used YouTube and Instagram as influencer marketing platforms.
• 67% of brands used YouTube, Instagram, and TikTok as influencer marketing platforms.

Who influencers are

Let’s define who an influencer is. Basically, an influencer is a person having authority and popularity in a certain niche. Influencers are often called opinion leaders because they enjoy recognition and see crowds of admirers on social media — being able to influence them with calls and content.

A popular Instagram photographer, a well-read cyber security enthusiast sharing thoughts on Twitter, a respected head of fintech from LinkedIn — all these people can be influencers. There are powerful people in every vertical and market. You just need to find them.

Some have hundreds of thousands, or even millions, of followers. But many look like regular social media users seeing no more than 10,000 subscribers. But they all have earned a reputation as experts in this field. These professionals respond to questions from other people, explain complicated things, and publish the most noteworthy content on their topics.

Types of influencers

Influencers can be categorised by audience size:

• Extra-big influencers (the most expensive): over a million followers.
• Macro influencers: 50,000 to 1,000,000 followers.
• Micro influencers: 10,000 to 50,000 followers.
• Nano influencers (the most budget-friendly): < 10,000 followers.

We can also group influencers by type of activity:

• Bloggers. They develop their social media profiles or blogs.
• Fashion bloggers. They create beauty and fashion content, and advertise apparel, accessories, and fragrances.
• Beauty bloggers. They publish content about cosmetics, care products, makeup, tattoos, and hairstyles. They also advertise cosmetics brands.
• Travel bloggers. They share content about travelling and culture of other countries, all with high-quality visuals. They promote gadgets, hiking gear, hotels, travel agencies, and airlines.
• Lifestyle bloggers. They showcase a lifestyle, share tips and thoughts, and help instil useful habits. They advertise food, digital technology, gadgets, cosmetics — any brands related to their concept.
• Food bloggers. They share recipes, tell about tasting sessions, and restaurant business. They usually advertise food and restaurants.
• Fitness bloggers. They create content devoted to healthy lifestyle, sports, and exercising. They advertise supplements, sports nutrition, vitamins, and food.
• Celebrities. Actors, models, singers, journalists, athletes, and other celebrities popular not only on social media but also in conventional media.
• Content creator. These people—artists, musicians, designers, writers—create artistic content. Some of them are celebrities.
• Experts. People widely known in a certain industry. Lawyers, physicians, marketers, programmers, stylists.
• Personal brands. People who have built their personal brand associated with a specific activity.

Besides, you can also sort opinion leaders by social media platforms where they are popular. For example, YouTube influencers, Instagram influencers, TikTok influencers and others.

How to choose an influencer to cooperate with

When you decide to partner with an opinion leader or influencer, you might recall such celebrities as Paris Hilton, Dwayne Johnson, even Lil Pump. But while these people are considered one of the most powerful influencers, not all opinion leaders enjoy such great fame.

In fact, you don’t always need an extra-famous person for your campaign. An influencer with around 15,000 followers, who is respected and famous in their vertical, can bring a better result than a large blogger with millions of irrelevant subscribers.

For example, you decide between an entertainment blogger with a million followers and an influencer with a smaller audience (a few thousand followers) and content devoted to financial services and crypto projects. Who will you choose?

At first glance, it seems that a larger blogger is much more appealing considering their reach. But the actual benefit of advertising on their profile is questionable. If you take a deeper look at their audience, you will find out that most of their followers are teenagers, while the others aren’t interested in any ads whatsoever. Almost all of them subscribed to this blogger for entertainment. Don’t expect any good reception from them when your partner introduces your fintech brand.

On the other hand is an influencer who only serves 10 to 20 thousand followers. And cooperating with them can be a way more productive affair. Their audience is focused on fintech and thus more eager to learn about your brand.

You need to do some research before you find the best option for promoting your product or your brand:

1. Analyse dozens or even hundreds of influencers.
2. Study their audience.
3. Review their content.
4. Define the topic.
5. Compare promotion rates.

If you don’t have a seasoned influencer relations specialist, you can come to Netside. Contact us on Telegram or use the feedback form to learn how our influencer relations manager can help your company.

How to streamline cooperation with influencers

A powerful influencer marketing consists of 5 stages.

Define your goals

The main purpose of influencer marketing is attracting new target customers. And the opinion leader you partner with is also interested in cooperation, since such a campaign can expand their reach.

Remember that your mission is just to attract prospects. They don’t have to buy from you or do anything on your website. This is the third goal of your campaign; the second one is boosting brand and product awareness.

Learn who you will influence

For starters, identify your audience. Then make a list of potential opinion leaders. This way you will make sure you understand who you are going to partner with. You might either address a large part of your existing audience or reach a whole new market.

Trust is king when you decide on your future partner. It’s critical that your audience has confidence in what your influencers say. Without it, any results will be sketchy — and you won’t see any significant benefit.

How do you know whether people trust a potential opinion leader? Take note of views, likes, shares, and comments. You will see segments of followers you are going to reach. What reflects the true loyalty is a high engagement level, rather than an inflated follower count that can be achieved with fakes and bots.

Do some research

Check what potential influencers publish. How often do they advertise brands or products? If their followers are tired of their sponsored posts, engagement won’t remain healthy for too long. It’s better to go with those sharing much free content to maintain followers’ enthusiasm and interest.

When you start cooperating with an influencer, always take into account the frequency of your posts and their posts. If you ask them to output a bunch of posts in a row, a smart influencer may not accept your offer, even if you pay high. They care more about the loyalty of their followers.

Sought-after opinion leaders usually have an inbox full of various offers. This is why they can reject many of them. When you approach an influencer, show them you have studied what they are doing. And make sure you do know what their profiles are about and who their followers are.

Establish direct communication

It may take you a while to compose a good proposal. But this way you will demonstrate that you are serious about your potential partnership. This will boost your chances of clinching a deal.

Provide as much information about your brand and product as you can. Tell what you are going to achieve with your campaign. Explain to the influencer how you can benefit them besides the reward.

Measure your performance

When you launch your campaign with an influencer, you may want to focus on likes and comments as target indicators. If a famous opinion leader has too many followers, you may be astonished by loads of likes landing on your post or video.

Don’t be fooled. This is not a result you need. You should monitor and analyse the following important indicators:

• Visits to your website
• New users
• Users who stayed with you after a few days
• Users who showed activity on your website

Look for an influencer yourself or go to a company?

So you now know what to remember when looking for a relevant influencer who will present you to their audience in the best light to boost your brand awareness and attract new customers. But now you ask yourself: how do I find an influencer that will be my best partner in promoting my products on the web?

Partnering with an irrelevant opinion leader may result in budget wasting. But if you make the right choice but you approach your potential partner for the first time, they will only offer you a basic rate (just because you will be a new customer amongst thousands of existing ones). But if you come to them through an influencer marketing agency, you are likely to get better rates because of agency’s status as a long-standing client.

This is why we recommend that you approach a company who has cooperated with influencers for years and will choose the perfect opinion leaders for you. Here are the benefits of such a way:

• Saving time and money
• Acquiring new customers
• Boosting brand awareness and enhancing company reputation
• Sales growth

Netside has been in the influencer marketing industry for over 4 years. We have a number of successful cases and 100+ satisfied clients. Call or write to us, and we will tell you how we will promote your brand through partnerships with opinion leaders.