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Developing a web3 project requires abiding to appropriate development background and best practices for a number of reasons:

<aside> 📌 Security: Web3 projects typically involve handling sensitive data and transactions on a decentralized platform, which can make them vulnerable to security breaches. By following proper development practices, such as secure coding practices and regular security audits, developers can ensure that the project is secure and minimize the risk of hacking and other cyber threats.

Scalability: Web3 projects are designed to operate in a decentralized environment, which means that they must be able to handle a large volume of transactions and users. Proper development practices, such as optimizing code, implementing caching, and using scalable architecture, can ensure that the project can handle a high volume of traffic and usage.

Reliability: Web3 projects must be reliable and available to users at all times. Proper development practices, such as monitoring system performance, performing regular backups, and implementing failover mechanisms, can ensure that the project is reliable and available to users.

Interoperability: Web3 projects typically involve integrating with other web3 technologies, such as smart contracts, decentralized storage, and blockchain networks. Proper development practices, such as following standard protocols and APIs, can ensure that the project is interoperable with other web3 technologies and can function correctly in a decentralized ecosystem.

Maintainability: Web3 projects are often complex and can be difficult to maintain over time. By following proper development practices, such as using version control, documenting code, and implementing automated testing, developers can ensure that the project is maintainable and can be easily updated and modified as needed.

</aside>

Here Is the Step-by-Step Guide for the Development Process of a Web3 Project

1. Requirements & Product Definition

🧠 Business & Functional Requirements

• [ ] Define core protocol purpose
• [ ] Map real user flows (deposit, swap, borrow, claim, etc.)
• [ ] Split features into:
  • [ ] MVP
  • [ ] Phase 2
  • [ ] Experimental
• [ ] Identify protocol type:
  • [ ] Lending / Borrowing
  • [ ] AMM / DEX
  • [ ] Perpetuals
  • [ ] Bridge
  • [ ] Staking / Vesting
  • [ ] Yield Aggregator
  • [ ] NFT / RWA
• [ ] Define financial & security invariants (must NEVER break):
  • [ ] Protocol must always remain solvent
  • [ ] Total supply must not exceed cap
  • [ ] No user funds lost unless rule-based
  • [ ] Liquidation logic must be fair & consistent

🔀 On-Chain vs Off-Chain Logic

• [ ] List essential on-chain components (funds, accounting, governance)
• [ ] Move heavy computation off-chain (analytics, risk simulation)
• [ ] Consider oracle-based validation for external data
• [ ] Ensure off-chain operations cannot bypass fund security

🧩 2. Architecture & System Design

📐 System Architecture

• [ ] Modular architecture — avoid god contracts
• [ ] Separate components:
  • [ ] Tokens
  • [ ] Core logic
  • [ ] Adapters
  • [ ] Governance
  • [ ] Oracle feeds
• [ ] Write interaction & data flow diagrams
• [ ] Document trust & permission boundaries

🛡️ Upgradeability & Governance

• [ ] Decide:
  • [ ] Non-upgradeable (safer, immutable)
  • [ ] Upgradeable (UUPS / Transparent Proxy / Beacon)
• [ ] If upgradeable:
  • [ ] Admin must be multisig / DAO (NO single EOA)
  • [ ] Upgrades must include timelocks
  • [ ] Define emergency pause logic clearly
• [ ] Add circuit breakers:
  • [ ] Pause/unpause
  • [ ] Withdrawal throttling
  • [ ] Emergency fund migration

🛠 3. Implementation & Solidity Best Practices

📦 Code Structure & Readability

• [ ] Folder structure:
  • [ ] /contracts
  • [ ] /interfaces
  • [ ] /libraries
  • [ ] /scripts
  • [ ] /test
• [ ] Use NatSpec for all external/public functions
• [ ] Avoid magic numbers — use constant or immutable
• [ ] Keep functions focused — break logic into internal helpers
• [ ] Avoid deep inheritance; prefer composition

⚙️ Function Composition & Inheritance

• [ ] Use external for orchestration only
• [ ] Core logic stays in internal/private
• [ ] Use inheritance only when transparent & minimal
• [ ] Document each override + expected invariants

📢 Events & Observability

• [ ] Emit events for:
• [ ] Use indexed fields for fast filtering

🚫 Known Pitfalls to Avoid

• [ ] Protect from reentrancy – Checks-Effects-Interactions
• [ ] Avoid calling untrusted contracts before state updates