How Much Does It Cost to Create a Crypto Exchange? Not as Much as You Might Think 3 Ways to Develop a Cryptocurrency Exchange
How much does it cost to open a crypto exchange? First, to get closer to the answer to this question, let’s figure out how a crypto exchange works and what are the main methods of its development. In this publication, we will analyze each of them, including comparing the final cost of creating crypto exchanges in each case.
Developing a cryptocurrency exchange from scratch
Developing your own crypto exchange is a complex task that requires a lot of effort and work. For example, you will nee a close-knit team of experience developers, competent analysts to calculate risks, and, without exaggeration, significant financial investments.
Cryptocurrency exchange development services are not cheap, and even a large team of professionals can work on a crypto exchange for about a year. Another integral part of all this complex work is the process of debugging software for a crypto exchange.
It will certainly require
A lot of time and money from your company. The cost of developing and launching a cryptocurrency exchange on your own is much higher than choosing other solutions that we will consider in this article.
However, all the resources spent can turn into a successful trading business if you have a solid business plan and the product development is done at the proper level. The end result should be flawless, because the exchange works with clients’ cryptocurrencies.
When developing your own
Crypto exchange, you nee to implement the following components. Now we will analyze how a cryptocurrency exchange is structure.
• Trading engine
The trading engine is the electronic heart of a cryptocurrency exchange. It is an electronic system that collects all open buy and sell orders and matches them, thus executing trades.
Open orders are place in the order book, where buy and sell orders are sorte by price and time. Thus, a trade can be execute if the supply matches the demand, otherwise it can be cancelle.
How does the trading engine work
Algorithms collect information about all open orders, and if two opposite orders are equal, they are execute and the deal is made. These algorithms also allow you to place market, limit and stop-limit orders.
The engine can use different algorithms to match buy and sell orders. The most common is the first-in-first-out (FIFO) algorithm, which prioritizes orders by time. For example, if there are two identical orders, the engine will choose the one that entere the system first.
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A trading engine is a complex
Integrate software that collects and instantly synchronizes data from different trading pairs. Developing a reliable engine that can process orders in a few microseconds is a very labor-intensive process that only experts in the field can handle.
Engine performance determines the transforming customer experience with salesforce overall efficiency and reliability of the exchange, its characteristics and order matching system.
It should also be note
That when developing a crypto mailing lead exchange from scratch, the software update process never ends, and you will have to constantly contact the development team, because the “set it and forget it” principle will not work here: a crypto exchange requires constant development.
Trading platform
A trading platform is software that allows traders to place orders and manage their trading accounts.
The trading platform includes
Several mandatory interconnecte components, namely: the server part with the platform trading engine, the client part in the form of trading terminals, as well as various auxiliary services and APIs that allow the implementation of additional services.
The trading platform is the most important element of a crypto exchange, and the level of further development depends on its ease of use. To attract users, it must be fast and necessarily include such important functions as calculating the wallet balance, transactions with crypto assets, transaction management and access to the order book.
• Liquidity aggregator
Liquidity is a measure of how quickly and easily one asset can be converte into another without any significant impact on the stability of the spot price.
Let’s look at an example
Client wants to buy 10 BTC at the market price. Let’s say the current market price in the order book is 19,000 USD. Liquidity in the market is low, and he bought the first 2 BTC at 19,000 USD, and the remaining 8 BTC for 19,500 USD. The average price of the purchase 10 BTC will be 19,400 USD.
A similar transaction could be made at an average price of 19,010 USD if the market liquidity level was high and the client bought 6 BTC at 19,004 USD and the remaining 4 BTC at 19,019 USD. In this case, the difference for the buyer would be 3,900 USD. Do you think the client would make the same transaction on a low-liquidity exchange next time if they had the opportunity to use another exchange with higher liquidity?
From this we can conclude that when developing a cryptocurrency exchange, special attention should be paid to liquidity. The liquidity aggregation module is designe to add external providers and internal market-making algorithms. This is a tool that helps you get the most profitable liquidity from an unlimite number of providers connecte to your crypto exchange.
