In our traditional brick and mortar system, every business needs a payment leg. Either in the form of fiat or in the form of commodity or maybe even other services, we use this payment leg to enjoy certain services. This article is a brief guide to launch DeFi token and is a answer to your question, how to launch DeFi token
So what about a decentralized digital ecosystem running through smart contracts and Blockchain? For the DeFi applications and ecosystem, DeFi tokens are the fuel.
A DeFi token facilitates the exchange of goods in a decentralized ecosystem. Depending upon the underlying Blockchain and the role, the DeFi token can be of different types.
At the very core, a DeFi token is a digital currency allowing the complete digitalization of a business. Not just for DeFi but a DeFi token can play a vital role in any Blockchain-based application.
What are DeFi Tokens?
DeFi tokens can be classified based on their characteristics. There are two primary types of DeFi Tokens, Fungible and Non-Fungible.
Fungible tokens are those that represent an exchangeable asset on top of a Blockchain Platform. These tokens represent an asset that has no unique attributes when compared to a similar asset. For instance, if we represent a dollar note with one token, it does not matter which dollar note is represented by which token because each of them will have the same value.
Non-Fungible Tokens or NFTs, on the other hand, are used to represent unique assets with defined properties that can not be exchanged. These assets have their own identity and value on the network. For instance, NFTs are used to represent an artwork or a collectible time such as a baseball card. Even an airplane ticket or a ticket to an event that has a specific seat number and value can also be represented on the Blockchain through NFTs.
Apart from these two classifications, DeFi tokens can be classified based on their usage in a particular ecosystem. This classification is:
First are the Utility tokens. These tokens are being used to accommodate services in a particular ecosystem and their scope exists in the ecosystem only. For instance, if there is a DeFi application that allows in-app purchases with a particular token only then that token will be a utility token.
Second, are the security tokens. These tokens are used to represent securities on a digital platform. There are different types of security tokens depending upon the type of security that they represent:
- Equity tokens: Security tokens used to represent stocks on Blockchain are called Equity tokens. They are similar to the traditional stocks with the difference of being more transparent without the need for a third party.
- Debt tokens: Debt instruments such as real estate mortgages are represented on a Blockchain platform using debt tokens.
- Derivative tokens: These tokens are used to represent a value derived from an underlying asset for purposes such as getting a loan or trading.
- Hybrid tokens: These tokens are the mic of Equity tokens and Debt tokens.
- Real asset tokens: These tokens are used to digitally represent any real-life assets such as real estate, art, or commodities.
DeFi tokens vs DeFi coins
Before we get into how to launch a DeFi token, we must understand the fundamental difference between a token and a coin in a DeFi ecosystem.
Coins on Blockchain are digital currencies that are value-based. Their value is usually defined by an algorithm based on supply and demand. On the other hand, tokens are used for a specific purpose and their value depends upon what purpose they are fulfilling.
If you lose tokens, they can be recovered however coins are non-recoverable.
How to launch DeFi Token
While it may seem like a technical thing to do, launching a DeFi token requires some predefined steps that have to be completed.
Mentioned below are the complete steps that you need to follow for launching your DeFi tokens;
- Every token has some attributes that are absolutely necessary. Therefore, if you want to launch a token, you need to decide the name of the token, symbol, and the total supply of the token. These attributes need to be defined very carefully because even a small change requires the token to be launched again.
- Choosing the underlying Blockchain platform to launch your token is the most important step. Depending upon the Blockchain platform, the structure of the token, smart contract used to create the token, the environment of the token, and the use of the token will be defined along with several other things. Ethereum is the most commonly used Blockchain platform for issuing tokens. It has the most widely used ecosystem for DeFi and well-defined token standards namely ERC20 and ERC721. Other popular Blockchain platforms are Tron and Binance.
- Define the purpose of the token clearly. If your tokenomics are not defined, chances are that you might need a new token in the future as the existing token will fail to give a comprehensive service.
- The next step is to create an account on the DeFi platform where you want to launch the token.
- This account will be used to launch smart contracts containing all the prewritten rules. These self-executing contracts will automatically launch the token with the predefined attributes and then manage the token. You can get these smart contracts developed from any professional DeFi development company.
- When launching a token, the security aspect should be given the utmost importance. One possible thing to do is to include a cold storage facility that allows the users to store their tokens safely from any unauthorized access.
- Before launching your DeFi token, make sure you test all the functionalities and also test the integration of the token within your DeFi ecosystem.
- Apart from these steps, you need to understand various factors regarding your token such as:
- The appropriateness of a token as per your business requirement
- The technical feasibility of the use case that you want the token to fulfill
- Economic feasibility of the token and the tokenomics
- The roadmap of the token usage and the necessary steps to be taken in case the token is either being used exponentially or not being used at all.
- Token distribution needs to be well-defined including the share for the stakeholders and reserves.
- A whitepaper should also be made which should include the current as well as the future scope of the token.
- Integration with popular third-party applications should also be looked into to increase the usability of the token.
- Inclusion of modern DeFi services such as staking, swapping, flash loans, and more should also be considered in order to compete in the market.
The DeFi world is becoming the new face of finance and DeFi tokens are the fuel for that world. Just as the fiat currency is used in our day-to-day transactions, DeFi tokens are used to facilitate our digital transactions in a decentralized ecosystem.
Having a well-defined, well-researched, and well-developed DeFi token can become the reason for your DeFi application to become mainstream. If you want an experienced and trustworthy team for your DeFi token to help you understand the concept as well as the requirement of a DeFi token, reach out to the Quillhash team today and get a free consultation with our DeFi experts.
Reach out to QuillHash
With an industry presence of years, QuillHash has delivered enterprise solutions across the globe. QuillHash with a team of experts is a leading blockchain development company providing various industry solutions including DeFi enterprise, If you need any assistance in the DeFi token development, feel free to reach out to our experts here!
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