Cryptocurrency exchanges are the most active and most important service category in the cryptocurrency sphere. According to the Chainalysis report, exchanges represent 90% of the total value offered by all of the crypto services. While crypto exchanges come in many types and sizes, we continue to see new exchange business models emerging every passing day.
However, some of the exchange types have become very popular and do not cost a fortune to build.
In this article, we will discuss the types of crypto exchange software and the features that determine the cost of the final product.
Types of Crypto Exchange
• Peer to Peer Exchange
A peer-to-peer crypto exchange facilitates trades between individuals. A user of the P2P platform is required to post a buy/sell order and the exchange helps with find a counterparty. Once the counterparties are connected, they can choose how they plan to settle the trade.
The P2P exchange does not require parties to handover the control of their funds to the exchange. As a result, the trades happen in a completely decentralized environment.
Decentralized exchanges are non-custodial exchanges that use smart contracts to drive direct transactions between users. While this kind of setup gives users more privacy, it also ensures that the exchange does not hold users’ funds exposing it to any kind of hacks.
Core functions of a DEX
• Capital deposits
• Order books
• Order matching
• Actual asset exchange
• Derivatives exchanges
Cryptocurrency derivatives like futures and options have gained a lot of popularity in the last year. The exchanges that make such products available to the users are known as derivatives exchanges. While with spot trading users can only bet on the value of cryptocurrency going up, with the derivatives, the users can short a cryptocurrency.
Along with that, these exchanges allow users to make highly-leveraged investments.
Features of a Derivative exchange
• Auto Deleveraging
• Stop Loss
• Partial close orders
• Insurance Funds
• Secure wallets
• Advanced order types
Apart from the above features, the exchanges also need to ensure that the security attributes are established. These add to the crypto exchange development and maintenance cost but are very crucial for protecting the user’s funds and data.
The five cost aspects of Crypto exchange development
Now that you know what features are required to build a top-tier crypto exchange, it is equally important to understand how the features affect the development cost.
1. Front-end development
The front-end acts as an interface between the users and the exchange. The front-end of the exchange must hide all the complexities of cryptocurrency behind it and make trading equally easy for professional and novice traders. Not only should the crypto exchange development company ensure that the front-end is appealing, but they must also ensure it is intuitive. Apart from that, the security aspects must be taken care of.
Having an appealing and intuitive front-end could be a little cost-intensive. However, one should not compromise here.
2. Back-end development
The Back-end development of a cryptocurrency exchange is the most time-consuming part. This requires a lot of strategizing and development effort. It is the core of the exchange and determines the functioning.
3. API integration
APIs determine the internal functioning of an exchange App or website. They are the logic providers. The APIs can be built from scratch or one can integrate third-party APIs.
4. Blockchain Integration
Blockchain integration is important for a crypto exchange because this will determine the kind of tokens your exchange can support. This needs to be properly strategized and worked upon so that it does not add too much to the development cost.
Once everything is developed, it needs to be brought together and well-tested. The cryptocurrency exchange development company might distribute testnet tokens to the community to test the end-to-end functionality of the platform. During testing, all of the aspects of the exchange should be tested like the UI/UX and exchange functionalities.
Looking at the global demand for cryptocurrency, it is evident that cryptocurrency exchange is a great service sector.
Getting a crypto exchange platform developed that can cut through the competitor clutter is not a difficult task. However, finding the right cryptocurrency exchange development company can really change the game for you. With a well-thought-through and well-developed platform, the platform operator can take the exchange to new heights.
At Antier Solutions, we have a team of skillful blockchain developers who have rendered cutting-edge platforms. We offer a white-label cryptocurrency exchange solution, and at the same time, we specialize in building custom exchange platforms from scratch.