Decentralized Exchange Development

Decentralized exchanges are becoming an increasingly popular option for trading cryptocurrencies, with popular platforms like Uniswap able to go toe to toe with many of their centralized counterparts. The rising popularity of DEXes comes as no surprise, as these platforms provide some significant benefits over centralized exchanges, chief among them being not having to rely on intermediaries and having no single point of failure.

DEXes generally fall into three main categories:

Peer-to-peer DEX – peer-to-peer decentralized exchanges utilize smart contracts to facilitate direct trading between users. Essentially, they allow cryptocurrency assets to be directly exchanged between crypto wallet accounts

Auto market maker – on these platforms, rather than interacting with other users, a user interacts with a smart contract that takes care of the trading automatically. The smart contract manages a so-called liquidity pool that represents a particular crypto trading pair.  Besides trading assets, users can also provide liquidity to a pool, which makes them eligible for earning a percentage of the trading fees accrued by that pool, as well as other rewards.

Marketplaces – these are a type of decentralized trading platforms that facilitate the exchange of unique assets, like NFTs. A decentralized marketplace functions as a peer-to-peer DEX. Often a marketplace also supports additional functionalities, such as NFT minting.

Development process of DEXes

It goes through several stages to ensure that client requirements and needs have been understood and met. These stages include:

1

Initial assessment

The first phase of the development process involves careful assessment of the scope of the project and the particular business case. We need to identify the type of product, the client’s expectations and goals for the product and the set of core and auxiliary functionalities that need to be developed for the project to be fully realized.

2

Planning

Next we plan out the development process, which involves devising a comprehensive development roadmap with well defined milestones that are communicated with the client. A project lead is appointed and a dedicated development team is formed. Here we determine whether we’ll develop the platform from scratch or use an open-source project as a foundation for our product.

3

Architecture design

The next stage is where we design the platform’s architecture, which is key for identifying how the different parts of the product fit together. This part is key for determining how the different layers - backend, front end and user interface - interact with each other. As per the client requirements, a Proof-of-Concept may be developed to test the viability of the idea and the design in a safe environment.

4

Smart contract development and wallet integration

Next we start proper development by writing the smart contracts that contain the business logic of the platform. Depending on the type and scope of the project, those might include smart contracts that handle staking, liquidity pools, LP reward distribution, DAO governance, NFT minting and so on. At this stage we also do wallet integration, making sure that your product works with some of the leading wallet solutions on the market .

5

Backend and frontend development

We continue with development of the backend and frontend portions of the product. We start off by building a prototype that helps us pin down how the different elements of the product fit together. We can use this prototype as a foundation for the full-fledged product. We can also use it to build an MVP that can be quickly launched to market and then easily expanded with additional features.

6

Audit and testing

Next we perform an internal audit to ensure that our smart contracts and other code are well optimized and do not contain bugs and exploits. We also work with some of the leading smart contract auditing firms in the world. As per the industry’s best practices, external smart contract audit is a must!

7

Testnet deployment

After the integrity of the smart contracts has been verified through rigorous audit and testing, we are ready to deploy the product to a testnet. This phase is meant to ensure that the product functions as intended in a simulated environment.

8

Launch on mainnet

Next, we have the mainnet launch, wherein the product goes live and starts onboarding actual clients. This leaves us with one final, but just as important phase.

9

Post-launch development and support

Whether the client decides to enter the market with an MVP or a full-fledged product, the work on a DEX usually continues well past its official launch. This includes maintenance, as well as development of new features and functionalities. The DeFi space is a rapidly evolving place, so in order for a platform to stay competitive it needs to continuously enhance its ability to provide utility to its users.

What makes LimeChain stand out from the crowd

At LimeChain we have a team of nearly 100 highly trained professionals which gives us the ability to tackle a wide range of Web3 projects. This includes DEX-related projects such as AMMs and NFT marketplaces.

Some of the projects we’ve worked on include Heliswap, which is a DEX for the Hedera network that supports swaps between ERC20 and Hedera-based tokens like HBAR, and the NFT marketplace we developed as part of our work with Universe.xyz. We also helped develop the AllianceBlock DEX.

Contact us if you want help with your dex development. From ideation and discovery, through product development, to post-launch support, we are ready to help you every step of the way.

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