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Creating your own crypto project: step-by-step guide

Creating your own crypto project: step-by-step guide

In 2021, the crypto industry attracted more than $30 billion of venture capital investments. Many programmers and financiers tend to enter this field so they can generate money in the new industry. However, despite what they want, many developers don't understand how they can create their own crypto projects from scratch. That's why we provide you a step-by-step tutorial on how to create a crypto project. 

1. Come up with an idea

Any crypto project is meant to bring value and utility to the industry and its users. It can be a unique solution for business development or a new product that will be available to crypto users.

Just creating a DeFi token makes no sense and is inefficient since such cryptocurrency won't be in demand when users already enjoy access to Bitcoin and other virtual currencies. The crypto project's token should be based on a value proposition, such as providing the cheapest transactions or helping to improve the global environmental situation.

The created crypto project is a decentralized financial service (or application), which will use the DeFi token. For example, MakerDAO is a credit platform for DAI stablecoin (a cryptocurrency, the exchange rate of which is pegged to the dollar). Uniswap crypto project offers all users to trade ERC-20 tokens, avoiding intermediaries and centralized control.

Crypto projects that provide insurance services, the use of derivatives (derivative financial tools), capital management, placement of interest-bearing deposits, etc. are actively implemented

When working on the idea of your DeFi project, you need to choose a tool that hasn't yet been implemented. This allows you to get the most opportunities at the initial work stage. You can evaluate by the following key factors:

  • High consumer demand for the traditional version of the tool;
  • Minimal competition - the decentralized finance sector is very young and there are many free niches where you can launch your own crypto-project;
  • Affordability - such projects as exchanges, borrowing or insurance platforms are large-scale projects that require a lot of time and effort, so you can consider a simple and inexpensive DeFi token. 

2. Choose a blockchain platform

Each crypto project is based on a blockchain, a special registry based on a chain of blocks, in which all transactions are recorded and a trust relationship is formed between the participants.

The best blockchain platforms for developing a DeFi project:

  • Ethereum is a decentralized global platform with ETH cryptocurrency, where you can use not only ready-made DeFi solutions but also create your own crypto projects;
  • Stellar is a decentralized public payment protocol with its own cryptocurrency called XLM, which provides for instant cross-border transfers between any virtual currencies;
  • IOTA is an advanced way of transacting and organizing the data transfer of the Internet of Things, based on Tangle technology to distribute registers to address the shortcomings of existing blockchains;
  • Binance Smart Chain is a blockchain system based on smart contracts (special protocols for transactions) which allows you to create crypto projects;
  • Polygon is a decentralized platform for creating blockchain networks that are compatible with Ethereum.

3. Gather a team

There are always whole teams of specialists behind successful crypto projects, where each specialist is responsible for a particular aspect of the creation and development of a decentralized application. You can come up with a creative idea, but for its further implementation you need support from programmers, financiers, and experts from other fields. Creating a crypto project means not just putting an idea on a blockchain platform, but also considering all the legal aspects related to registration and launch, promotion and development strategy, technical support to improve the DeFi project and eliminate drawbacks during the workflow.

Moreover, the presence of a team responsible for the crypto project, as well as expertise of each participant, increases the interest of investors at the stage of ICO/IEO or IDO and the initiative of capital investment.

4. Create and develop a crypto community

The formation of a crypto community around a crypto project is an important step in its development and promotion. You create not just a DeFi service, but an entire ecosystem that allows you to announce yourself and your product. Use such communication channels as Telegram, Twitter, Facebook, LinkedIn, sign up for the Reddit forum, develop a marketing campaign to attract new users.

When creating a project crypto community, you should think about interaction with other financial services, such as cryptocurrencies, exchanges, even banking institutions, as well as provide integration with the top cryptocurrency wallets (Blockchain, Electrum, Exodus, Trezor, Legder, Jaxx).

5. Fundraising - ICO, IEO, IDO

When raising funds to launch your own crypto project, you can choose one of the following options: ICO, IEO or IDO.

An ICO is an initial coin offering. The first launch took place in 2013, but it only gained popularity in 2017. This method allows you to attract investors and get their capital at an early stage of the project (when it completes its development and prepares for launch), offering them to buy tokens at the initial cost. The funds raised are used to finance the launch and further development of the project.

Advantages of ICO:

  • It is an effective tool for raising funds for project’s development even before its launch;
  • Minimum holding costs;
  • Fast process organization;
  • Tokens can be split;
  • Minimum entry threshold for the investor.

Main disadvantages of ICO:

  • There is no protection of investor rights;
  • No dividends are provided;
  • High risk of fraud and dishonest projects, which causes investors to lose their capital.

IEO is an initial coin exchange offering on the exchange. In other words, it is an improved version of ICO, when a centralized cryptocurrency exchange manages the process of placement and sale of coins on behalf of the crypto project. It became popular in 2020. There is a fee to issue tokens, investors buy coins directly on the exchange, while their transfer is made upon completion of the IEO.

Advantages of IEO:

  • Verification of crypto projects before coins are placed;
  • Technical simplicity of all processes;
  • Guaranteed listing.

Main disadvantages of IEO:

  • It is necessary to pay the exchange fee.

IDO is a primary coin offering, with a decentralized trading platform involved in the fundraising process. This method has been actively used since 2021. Tokens can be placed on multiple exchanges simultaneously, which is not available for ICOs or IEOs.

Advantages of IDO:

  • No fixation to one crypto exchange;
  • Unrestricted access for all categories of investors;
  • Cost minimization for organizing the process of token sales;
  • Transparent transaction terms.

Main disadvantages of IDO:

  • Fraud risks;
  • The price of token before and after token sale can change drastically.

6. Legal registration

Crypto project needs official registration, which requires studying the legislation and all the key regulatory aspects of the crypto industry. It is also important to have a Legal Opinion - an opinion letter from a lawyer, which is required for funding, for example, when conducting an ICO.

New issues and tasks related to legal subtleties may arise during DeFi-project development, so they can be solved simultaneously.

7. Scaling aspect

With the development and popularization of the DeFi-project, it is necessary to think about its scaling. It will increase productivity and minimize existing commissions, while maintaining a high degree of security and decentralization. It requires both technical updates and adding new features, as well as improving the quality of the ecosystem and monitoring trends in the crypto-industry as a whole.

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