While the financial services a DeFi innovator intends to offer protocol users may be clear, developing the app that facilitates them is far more challenging. There are plenty of considerations involved, such as;
- What blockchain to build on
- How to incentivize developers
- What languages to use
- Security and smart contract auditing
- How to accommodate high transaction volumes
- Tokenomics and governance
All these factors can significantly impact how fast your DeFi development goes. On that note, let’s discuss how SparqNet addresses various aspects of DeFi development and consequently speeds up the process:
Speed
Speed is important in DeFi development for many reasons. Firstly, without high transaction speed, it’s hard to evaluate a DeFi app’s performance amidst time-sensitive conditions. These include the impact of high-frequency trading bots, the efficiency of calls and responses between the app and an oracle, and the effect of liquidity pool balance changes on trading fees, slippage, yields and interest rates.
Ultimately, low transaction speeds discourage potential users from trying out a DeFi app, and eventually drive away existing users. This reduces the sample space for any tests and shrinks liquidity, making it easier for malicious actors to manipulate asset prices on blockchains.
Thankfully, Sparq Labs considers transaction speed vital to DeFi development. This is why SparqNet can process up to 400,000 transactions per second. More importantly, there’s 90% consensus with each function to ensure an ample intersection between the speed and security facilitated by validators.
Subsequently, we enable DeFi innovators to focus on developing new features and enhancing existing functionality without worrying about how well the underlying components hold up under massive loads. More specifically, they can expand on their desired cross-chain transaction capabilities thanks to our external bridging capacity that will start at 15–30 seconds for a round trip.
Composability
The DeFi space spans several blockchains, which also means there are numerous tokens with differing characteristics. This complicates financial service provision since many of these blockchains are siloed and operate in distinct ways.
Accordingly, there’s great demand for DeFi apps whose services are available on various blockchains, with the underlying protocols interconnected for cross-chain transactions. Such products are more coveted if they can easily interact with other dApps on a blockchain.
And with Ethereum being the dominant smart contract platform, many innovators pursue Ethereum Virtual Machine-compatibility for their apps. Here at Sparq Labs, we offer developers the ability to create EVM-compatible applications using SparqNet, our new SDK toolchain for building high-performance apps.
So how does this attribute contribute to faster DeFi development?
When you build using our protocol, your code can be easily transferred to any EVM-compatible blockchain, giving its users access to your services quickly. Basically, you don’t have to start afresh.
Additionally, you can run a minimum viable product on several chains concurrently to find out the differences in requirements for each chain. For instance, one blockchain’s consensus mechanism may support more throughput while another chain is a little slower.
This could mean that on the slower chain, you need to work on connecting your app to a sidechain for a better user experience. The faster you make such discoveries, the better. Having your app on multiple blockchains simultaneously also gives you a head start on testing the robustness of processes like cross-chain token transfers via bridges.
Furthermore, you’ll have many users to work with and see how your app holds up when transactions increase drastically. This ranges from big issues like the actual back-end service execution to minor ones like how smooth the front-end is.
You can evaluate communication with oracles, compatibility with wallets, security, susceptibility to market manipulation and other attacks that can happen while a dApp is functioning normally.
And don’t forget, the faster you can run your app on several blockchains, the quicker capital flows into your ecosystem. Your token can be added to more decentralized and centralized exchanges and later included in more products and services like liquidity pools and savings accounts with yields.
Flexibility
One of the major factors that slow down DeFi development is the tool choices. Many Web2 developers are already familiar with some prevailing programming languages, so when it’s time to work on Web3 projects, they aren’t that eager to change.
For example, Solidity is one of the most commonly used languages for developing on Ethereum, and there are other resources like Hardhat, OpenZeppelin, Truffle, Ganache, Ether.js and Web3.js. However, the challenges aren’t entirely about switching to new languages, especially since some resemble each other and proficiency in one gives you an advantage when learning its “relatives.”
There’s also the issue of how different languages have become more commonly used on specific blockchains. For instance, Rust is popular in the Solana and NEAR ecosystems, Clarity is particular to the Stacks blockchain, and JavaScript is great for NEAR.
So if you’re building a dApp with several blockchains in mind, you need to be more open to using multiple tools, and this is where our toolchain comes in handy. With SparqNet, you can utilize many popular languages, like C++, JS, Rust, Go and others. This helps developers quickly get started on the work using what’s familiar.
And as a bonus, you’ll spend less time looking around for developers who are conversant with the newer Web3 languages. SparqNet’s language-agnostic nature also makes it ideal for the DeFi development space, where open-source approaches are common.
Many DeFi app builders occasionally look at other successful projects’ code for valuable lessons. In that sense, you can quickly move through the development of features where reusability applies. Additionally, it’s easier for new developers to join your team and pick up where others left off if you’re referencing tried, tested and proven open-source code.
So basically, you worry less about what language other developers use to code and focus more on how to modify the code according to your unique objectives. And for aspects like user interfaces, it’s easier for various developers to unleash their creativity using their preferred front-end tools.
Interoperability
As DeFi continues growing, it’s prudent to consider how well your app works on other chains and how welcoming your native chain is to apps originating from other chains. Yes, different bridges facilitate the transfer of assets from blockchains like Ethereum to other blockchains.
Unfortunately, many don’t offer every user’s desired blockchain matches, with some even being unidirectional. Moreover, some bridges are centralized, and many others are unsecure. In that respect, many DeFi projects still struggle to extend their services to other chains. Luckily, our toolchain can solve this problem.
SparqNet has embedded bridging capabilities into its protocol so that they are an intrinsic attribute of the chain, and outsiders can easily use them to plug into our ecosystem. Essentially, there won’t be any need to look around for a bridge and hope it connects to SparqNet.
As long as it’s a smart contract or token from an EVM chain, you can hook it up to our toolchain and establish a presence in our ecosystem with minimal coding. Consequently, many DeFi-related actions are simplified. For instance, it becomes easier to borrow funds from one blockchain’s lending platform or buy tokens from one blockchain’s DEX and use them in a DeFi app on SparNet.
For starters, this is good for liquidity. But in addition, delivering such capabilities is in line with a prominent ethos in the blockchain space, which champions free trade and decentralization benefits like increased uptime.
So for instance, if yields on several apps on one blockchain are dwindling or loan interest rates and trading fees are spiking, it’s easier for users to explore alternatives. All-in-all, SparqNet’s innate bridging helps you integrate EVM-based assets much faster.
What does additional functionality in cross-chain transactions look like?
Take the example of transferring tokens from one chain to another to make a trade. There’s steps like connecting a wallet to the bridge, sending tokens to its repository (some services may require activation of a particular token before using it in the bridge app), indexing the tokens and minting new ones.
All this can take considerable time and fees, and the effort may be worthless if your tokens arrive when their price is no longer where it needs to be to make a profit. But imagine automating the execution or cancellation of this transfer based on changes in asset prices.
In theory, this is as straightforward as the idea of slippage, but in practice, the mathematics can be a little more complex, and there may be more steps like consulting price feeds and returning tokens. More steps mean a greater demand for higher transaction speed.
And with a target of 400,000 TPS and continuously reducing time-to-finality for external operations, it will become easier to support complex transactions with multiple steps in their logic.
Wrapping Up
Whether you’re building, testing, or you’ve already launched a DeFi app, speed is crucial if you want to maintain an edge. It not only dictates how swiftly you can serve customers but also how fast you can roll out advancements that enrich the customer experience.
So when choosing a platform for your DeFi project, go with one that checks all the boxes above. Our budding offering at Sparq Labs does just that, so come build the future, come build on SparqNet!
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