DeFi or decentralized finance is a crypto sector that has rapidly risen to popularity in the last year. This rise in popularity can be attributed to the demand for decentralized finance amongst investors looking for noncustodial financial lending protocols that yield crazy high interest rates.
This is probably why DeFi has recently caught the attention of various venture capitalists and top organizations. According to DeFi Pulse, the Total Value Locked (TVL) at the start of January 2020 was $600M, and as of today, it has risen to $55B!
What does this mean for the developer community? The rise of the DeFi crypto sector presents a massive opportunity to developers looking for a lucrative, intriguing career in the crypto industry.
Being a fairly new crypto space, the demand for DeFi developers is on the rise. Hence, if you’re thinking about switching to DeFi development, then this may be the perfect time to hop onto the bandwagon and shine.
If you’re wondering if switching to DeFi is the right choice for you, the skill sets that you need, and the platforms where you can find a DeFi job, then I’ve got you covered in this guide.
By the end of this article, you’ll have a much better idea about the topic, and you’ll have the resources to make an informed decision about switching to DeFi development.
What Is DeFi or Decentralized Finance?
Decentralized finance or DeFi refers to a sector of the crypto industry that deals with noncustodial financial products. The decentralized or noncustodial part is what makes the DeFi sector a highly experimental and lucrative option.
Centralized intermediaries such as banks and centralized exchanges do not have any control over DeFi operations. Such centralized exchanges and banks are subject to more regulations and scams.
This is why investors and traders are turning more toward decentralized exchanges (DEX). DeFi crypto exchanges and lending protocols are the most popular financial instruments at the moment, with Aave, InstadApp, Compound, and Maker being the most popular DeFi lending protocols. In addition, DeFi cryptocurrency exchanges such as Curve Finance and Uniswap are also immensely popular.
All the major lending protocols are based on Ethereum cryptocurrency that involves the lending and borrowing of Ethereum tokens called ERC-20. The DeFi protocol creators have no control over your ERC-20 token holdings.
Investors with holdings in some of the best Ethereum wallets may decide to use the DeFi lending platforms to lend ERC-20 tokens and benefit from the interest. While someone else may decide to borrow this and put it to use in some crypto trades and earn profits.
The key to all DeFi projects and protocols lies in smart contracts. According to Decrypt, “Smart contracts are contracts expressed as a piece of code that are [sic] designed to carry out a set of instructions.”
To put it simply, a smart contract is a piece of code that enables DeFi projects and protocols to function without the interference of a centralized organization. DeFi apps are nothing but a series of smart contracts that fulfill the need for a centralized entity without actually having one.
Now that you have a fair understanding of the basic aspects of DeFi, let’s have a look at the role a developer has to play in a DeFi project.
How To Get Started Coding in DeFi?
To start with, a DeFi developer must have the fundamental knowledge of computer programming and the basics of programming languages.
Apart from this, it is also important to have the basic knowledge of cryptocurrency and functioning as with any other development job in the cryptocurrency space. This includes having a grasp of the fundamentals of cryptography, data structures, and networking.
If you truly want to outshine other DeFi developers and get a headstart as a DeFi coder, having a true understanding of the workings of the banking and finance sectors will also be of immense help.
As mentioned above, most of the DeFi projects involve the exchange of Ethereum tokens known as ERC-20. The process of depositing ERC-20 tokens to the smart contracts is done through Solidity—a high-level object-oriented programming language.
Solidity is used to implement smart contracts that form the foundation of the entire decentralization process.
Solidity is designed to compile with the help of Ethereum Virtual Machine. You can start learning Solidity by practicing and compiling code on your browser.
Creating and Deploying a DeFi Application
For creating and deploying a DeFi application with Solidity, you can make use of tools such as Truffle and Ganache. Both of these tools are available as a part of the Truffle Suite.
Truffle is an IDE and testing framework for deploying Ethereum smart contracts that you’ve designed using Solidity. Using Truffle, you can deploy smart contracts into the blockchain.
Ganache, on the other hand, helps you create a local Ethereum blockchain where you can deploy and test your smart contracts. It helps you simulate real blockchain networks and thus test the functioning of your smart contracts. Ganache is available as a command-line tool as well as a desktop application.
To give a brief overview of how you can build and deploy a DeFi application, here are the steps that you need to follow:
- Create and compile the ERC-20 token.
- Deploy the ERC-20 token using Ganache.
- Create the smart contract.
You can refer to this DeFi application tutorial to learn more. You can seek help from the official Ethereum community to become a competent developer in the DeFi space and keep up with the latest industry updates.
How To Find DeFi Developer Jobs?
Once you’re confident with your DeFi coding skills, you can start hunting for jobs in various crypto job platforms. However, before that, make sure to build your authority in the space by projecting yourself as a DeFi developer on various social media platforms such as LinkedIn and Twitter.
Here’s a list of crypto job boards where you’ll find suitable DeFi developer jobs:
- Crypto Recruit
- Cryptocurrency Jobs
- Blockchain Headhunter
Since DeFi is a highly experimental and risky space, make sure to have a complete understanding of the business fundamentals of the project before you take up a programming job.
The DeFi development space is fairly new and devoid of competition. Therefore, you also have a high chance of grabbing some lucrative DeFi job opportunities over social media platforms such as LinkedIn, Twitter, and Reddit.
You can start by creating impressive profiles on these platforms, putting out content relevant to DeFi and optimizing your profiles and portfolio to project yourself as a competent DeFi developer.
DeFi: A Promising Potential for the Future
DeFi is a new and upcoming space in the crypto sector, with promising potential for the future. It is a highly lucrative space where tons of investors and venture capitalists are looking to invest in.
In this post I’ve shown you everything you need to know about getting started as a DeFi developer. You can use this knowledge to nudge yourself in the right direction and make your mark as a successful DeFi developer.