Blockchain data is what gives DeFi businesses and apps the network visibility they need to remain competitive in a rapidly growing market. But obtaining the necessary data from every protocol is a challenge thanks to the blockchain’s decentralized, globalized and non-stop nature.
Let’s take a look at the main challenges and how to overcome them to create successful DeFi applications.
One of the first issues facing DeFi developers is the sheer volume of data sources. The blockchain ecosystem is rapidly growing with thousands of crypto and digital assets being traded globally across multiple decentralized exchanges and DeFi dApps 24/7.
According to Statista.com, as of February 2022, there are more than 10,000 cryptocurrencies— a massive increase from just 66 in 2013. If we consider the top three cryptocurrency networks, their daily transactions have increased sixfold over the last five years, from 250,000 to more than 1.5 million transactions a day.
The next issue is that each blockchain has its own unique set of protocols and specifications. There is no industry standard with regards to what information should be included in transactions, how that data should be stored, or how it should be accessed. Inconsistent data makes the tasks of analyzing and utilizing that data an extremely frustrating experience.
But until there are unified standards across blockchain development, this is unlikely to change anytime soon.
Then factor in that every crypto exchange has a different API which frequently changes and the task of gathering and keeping track of data becomes even more complicated.
In order to obtain information from a blockchain, you need a way to talk to it. That’s where nodes come in. But setting up a node and maintaining it can be a technical nightmare.
Plus, a node will only communicate with its own network, i.e., a Bitcoin node will only give access to Bitcoin data. To get data from across the blockchain ecosystem, you’ll need multiple nodes.
This would not only require significant operational expertise but also protocol specific knowledge, plus a considerable amount of energy to keep them constantly available.
Other problems you may face when deploying a node yourself include:
- Limited bandwidth: Your internet provider may charge extra or cut you off if you use excess bandwidth not included in your contract.
- Unstable internet connection: Interruption to the synchronization of the node will require a restart, which can set you back weeks.
- Slow down normal network traffic: If you are deploying a node on-site on your business network, it can severely slow down or bottleneck your normal network traffic, affecting day-to-day operations and user experience.
- Third-party attacks: When running a node, you are entirely responsible for ensuring node security and maintaining blockchain integrity.
This is a huge amount of time, money, and effort just to obtain the data before you even start working with it.
The transaction data includes ephemeral data which is necessary to capture in-flight in order to fully understand the full transaction data. And in the case of smart contracts these transactions can also include multiple sub-transaction data, across multiple chains, DEX’ and liquidity pools.
This complex raw data must then be processed. Of course, since each blockchain stores its data in its own unique way, processing it requires a unique approach plus the deep expertise it takes to index it and turn it into actionable information.
The process of indexing the blockchain is extremely complicated and challenging even for advanced developers, involving a considerable amount of time and effort.
So, we’ve already established that each blockchain has its own protocols and procedures. We also know that to access data from multiple chains, you’d need multiple nodes. But with nodes comes responsibilities.
Keeping nodes secure against attacks requires implementing robust cybersecurity practices and constant maintenance to ensure software is correctly configured and secure. This means hiring a team with expert blockchain knowledge.
Blockchain experts with experience are hard to come by and harder to afford. Whether you try to hire externally or grow talent from within, you will be adding years to your go-to-market time while draining your budget.
According to Talent, the average annual salary for a blockchain engineer in the USA is around $152,778, going up to $200,000 per year for more experienced engineers. A blockchain developer's average salary ranges from $121,875 per year to $184,616 per year.
Fortunately, you don’t have to try tackle any of these issues on your own. Using the services of a reputable blockchain infrastructure as a service company removes the need of running your own nodes, hiring a team of experts, or spending millions building or maintaining a complicated infrastructure.
A ready-made service that provides blockchain data means developers can focus on dApp UI and UX, without trying to fit in the manual configuration and constant maintenance of relevant data.
Instead, a blockchain infrastructure provider will be responsible for handling hardware, synchronization, and interoperability across multiple nodes as well as the streamlining of blockchain data collection and presentation.
Crypto APIs is a blockchain data provider with the necessary enterprise-grade infrastructure and proven professional talent at your disposal. Our Blockchain Data gives instant access to accurate blockchain data with just one integration using programming languages from our SDK libraries that your team already knows.
You can get both historical and real-time data, which can be unified, raw, read-only or segmented. A lightning-fast response time of 25ms is guaranteed by the scalable- and load-balanced database where all data is synced and indexed.
Retrieve information on blockchain data such as Blocks, Addresses, HD Wallets (xPub, yPub, zPub), Balances, Unconfirmed Transactions, Confirmed Transactions Uncles, Epochs, Tokens, Smart Contracts, Internal Transactions, Mempool, Fees, and more.
With our full product suite and unified endpoints, you can get the blockchain data needed to quickly launch DeFi products and services without the heavy investment in blockchain infrastructure or additional expertise.
To find out more about Crypto APIs Blockchain Data or any of our other blockchain tools, contact us today.