Everscale Partner
Cryptocurrency Exchange Architecture
Functionally, a cryptocurrency exchange is expected to do nothing more than connect buyers and sellers. This can be achieved using different architectures.
Monolith is a universal architecture in which wallets, payments, bills and the administrative part are located on one server. Not suitable for working with a large number of users.
Modular — contains easily manageable modules for each function, usually located on separate servers.
Distributed — has independent modules consisting of different submodules. The database can be hosted on multiple servers. Performance is proportional to quality and maintenance efforts.
It should be noted that any cryptocurrency exchange should be easily scalable. This can be achieved by increasing the capacity of the server, optimizing scripts or transcoding modules.
Key features of the cryptocurrency exchange
The work of any cryptocurrency exchange includes the following aspects:
-Graphical user interface
-Wallets
-Liquidity
-Trading engine
-Backend architecture
-Admin panel
Backend architecture
Each architecture has its own advantages and disadvantages, and it is important to determine your goal before proceeding with the creation of a cryptocurrency exchange. The principle of operation for different models is usually similar. Today, the most efficient data transfer API is in JSON format.
The server side of the cryptocurrency exchange is one of the most important aspects. This is the heart of the whole system, where operations and calculations are carried out through basic scripts. In developing the architecture of the project, this part should be focused on, while other aspects of the exchange may be secondary.
Graphical user interface
It should be recognized that the end user is not very concerned about the subtleties of coding, taken into account when creating the kernel. For them, a pleasant and intuitive interface is important. This user interface is the first thing that strikes the user. At the same time, a growing number of smartphone users are requiring the website to be compatible with mobile device screens. Perhaps, at the very beginning, it is not necessary to create mobile applications, but over time, it would be nice to make them available on two main mobile OS — iOS and Android.
Purse
The wallet consists of two parts: a cryptocurrency wallet and a fiat wallet. This allows you to connect the blockchain with the functions of replenishing and withdrawing traded currencies.
There are different ways to integrate your wallet with the main banking system. In manual mode, these can be direct bank transfers, and in automatic mode, you can use Visa or MasterCard services. Money is credited directly to your bank account.
Banking is the weakest part of any cryptocurrency exchange. Often, exchange offices go to various, sometimes hardcore tricks in order to continue working, which in the end is also fraught with consequences. An example is Crypto Capital.
Liquidity
Liquidity is one of the most important aspects of any exchange, including in relation to traditional exchanges. The order book shows how popular the stock exchange is. Therefore, a cryptocurrency exchange must also display order books in order to display liquidity.
You can choose a liquidity provider or simulate intra-exchange trading activity using bots. The first option will increase the cost of the business, which will negatively affect the interests of customers.
Trading engine
The trading engine is the core of your exchange, which connects buyers and sellers. The speed and performance of the exchange are directly dependent on the trading mechanism. Most p2p cryptocurrency platforms use limit and market orders to ensure that performance does not suffer.
Some systems allow you to place stop-limit and stop-loss orders. They are preferred by experienced traders.
Experienced traders know that stop loss can sometimes do more harm than good.
Admin panel
The admin panel is the control center of the exchange. The owner or administrator should have access to all important functions and be able to perform key actions, including user management, wallet and transaction management, including additional actions such as controlling KYC and AML. If necessary, and depending on the size of the exchange, you can even delegate roles to other users with limited authority.
Cryptocurrency Exchange Security
For any system that deals with a huge amount of money — security is of the utmost importance. Most hackers try to use several methods at once to violate the ecosystem’s security.
“White hackers” from March 28 earned $ 32,000 for detecting 30 vulnerabilities in cryptocurrency projects
Here are some of them:
Hacking admin panel — an attacker gains full access to the system. However, this can be avoided by using two-factor authentication. Another way to secure funds is to combine wallets of both cold and hot storage.
Hacking a specific user — this will hurt the exchange not as much as when hacking the admin panel, but, nevertheless, this is a vulnerability. As in the first case, it will be useful for users to use two-factor authentication. It is well known that hackers are aimed at users who, in one way or another, have shown that they have a lot of money in their crypto wallet, and this causes growing concern.
Social engineering is one of the most primitive and, at the same time, the most inevitable methods that one has to face. The system itself will not be able to particularly help if you consciously or unconsciously disclose the credentials from your wallet. The best way to protect yourself from these attacks is to understand that even the smallest information can open access to your wallet.
Hacking a server — for a hacker, this is one of the most profitable ways to gain access to huge amounts. The best way to avoid such attacks is to invest in a good supplier. Providers such as Amazon Web Services or Microsoft Azure are known to provide security by protecting your data from denial of service attacks.
It is worth thinking carefully before deciding on the servers of these companies.
