DeFi CrowdFunding Platform Development is about developing a decentralized Crowding funding platform that ensures a secure and safe crowdfunding system for crypto based businesses. Normally, CrowdFunding provides opportunity and freedom for funding a business. That’s the main reason to why this domain started flourishing since 1997. The new business ventures can raise money by crowding methods easily. Due to this reasons experts predict that, crowdfunding transaction value will raise within the few years at an annual growth rate of 12%. Based on this calculation, by 2023 the crowdfunding transaction volume at global level will touch $11.98 billion.
What is CrowdFunding?
Crowdfunding is the best way possible for businesses to raise capital for their venture. In businesses, the crowdfunding presents an opportunity for the the startups to grow from the the source of large group of investors in an efficient way. Businesses such as startups, angel investments and transactions other than the traditional financial investments comes under this.
The Way Crowdfunding Works
There are many types of crowdfunding models that are existing, but a few are very popular, that includes
Reward based crowdfunding- Here the people will donate to unlock a reward that’s linked to the project they support.
Donation based crowdfunding- It is based on people donating for a specific cause ot charity.
Peer to Peer crowdfunding- It allows the individuals to get loans directly from the other individuals rather than a bank or a financial institution acting as a middle man.
These models of crowdfunding are very effective and they offer many positive attributes such as the ease of marketing, high revenue generation with lesser risk with goof product accreditation
Challenges of CrowdFunding Industry
Very few crowdfunding campaigns reach their goals in an over all manner. This is mainly because the industry peoples will have trust issue, operational efficiencies , distribution of rewards etc. The main challenges are listed below-
Trust issues- With crowdfunding concept on rise, the trust has become a big blockages for in the growth of the industry. Crowdfunding platform that newly launched will face issues with gaining credibility which could turn out as a big challenge. With no trust present, people won’t be ready to invest their funds in a project.
How DeFi Powered Crowdfunding can Gain Trust?
DeFi crowdfunding platform will be build on Blockchain technology making it bit more secured than a traditional crowdfunding platform. This type of Decentralized crowdfunding is usually managed via a distributed computers. The Blockchain makes it impossible for hackers to alter the information present in it. This helps to create a trust between the investors and the crowdfunding platform.
Solves Accounting Issues
When the funds are raised, the accounting functions related to it are very uncertain, as a result of which the investors won’t have clear information about the way they will receive their rewards and capital investments back. This can act as a huge reason to why investors are usually a step away from investing in crowdfunding platform.
The DeFi solves this by involving the smartcontracts, which is one of the boon to the decentralized ecosystem. The smart contracts help manage the accounting. In this case, the contract will be set up between the investor and the crowdfunding platform. Then the investor will be assured about the terms of the contract which will not be changed in the future as the smart contracts are unalterable. Also, the payment returns to the investor will be automatic, thus increasing the trust.
In a crowdfunding platform the investor always wants to know the movement of his funds in the system and the way its getting utilized. Thats an usual need for the investors to get assured about his investments. But in a traditional crowdfunding system, the maintenance of transparency is bit tougher and also it is prone to manipulation.
But with the DeFi crowdfunding platform utilizing Blockchain Technology, this will be very much possible. The public ledger will act as a medium in which investors can see how their funds are moving in the system. This is all because of Blockchain technology.
Starting a DeFi CrowdFunding platform will address all those challenges that are mentioned above, than a centralized crowdfunding platform. Also the DeFi Crowdfunding platform Development will help investors in many ways such as providing low risks to their investments, access to the way the capital is being utilized, help in transparency and trust building too.
DeFi in crowdfunding marks the new era of crowdfunding. This helps the investors to become more confident about their investments. Blockchain technology makes it possible. Thus, entry of blockchain is very much needed for Crowdfunding Industry.
If you are seeking to launch a DeFi based crowdfunding platform, then we Pulsehyip, the leading DeFi development company can help you launch a decentralized crowdfunding platform easily and swiftly.Our adroit experts can help you launch you platform sooner with their agile methodology. Connect with us to share your thoughts and for your queries!