How To Scale Your Crypto Exchange

Crypto exchanges give investors digital marketplaces to buy, sell, and trade a wide range of digital assets. With more than 580 million crypto users active globally and growing, starting a crypto exchange serving your regional market is an exceedingly viable business venture.   

If you’re developing a crypto exchange with a sustainable plan for growth, you must begin with scalable architecture. 

Fortunately, with a well-measured approach, scaling your crypto exchange from 10,000 to 100,000 users doesn’t have to be overly complicated. This guide will explain how to set up infrastructure that’s capable of effectively adapting to handle higher levels of trading and transaction volumes, without any sacrifice in speed, stability, or service.

How Architecture Impacts Scalability and Performance

Building any successful crypto business depends on properly managing growth through a well-built blockchain technology architecture. When setting up a crypto exchange, it’s important to determine how your business will handle projected user growth. 

For example, let’s say that your startup has onboarded 50,000 new users in the past six months. Because of this growth surge, your exchange is experiencing noticeable server issues due to the increasing number of customer transactions and surge in trade volume. 

This problem indicates that your centralized exchange (CEX) isn’t currently equipped to handle increasing traffic. If left unsolved, it’ll get worse as your customer base increases. Worse, your customers will experience extended downtime and likely choose another exchange. 

A crypto exchange should expect unprecedented growth and build an initial architecture that can scale with the business without sacrificing performance. A well-thought-out crypto exchange architecture anticipates problems beforehand and includes viable solutions that can be applied anytime. 

AlphaPoint’s battle-tested exchange software reflects this best practice. Our white-label solutions are highly customizable to meet your ever-changing business needs without expensive and time-consuming in-house crypto exchange development. 

Key Infrastructure Components of Scaling an Exchange

There are three essential components that you’ll need to scale your crypto exchange infrastructure: database management, server solutions, and technology updates. Let’s cover each component below in detail.

Database Management and Optimization

Crypto exchanges handle a lot of customer data, so they need a robust database management system to deliver world-class performance. To achieve this, exchanges must employ efficient data models to process larger trading volumes. 

One way an exchange can achieve efficient database management is by deploying indexes. A database index is a structure that improves data retrieval speeds to locate essential data quickly. Database indexes can accelerate transaction speeds while optimizing data storage for enhanced performance. 

Dedicated Servers vs. Cloud Hosting

Dedicated servers commit their entire CPU and resources to the client and have speed and storage advantages, but do not dynamically scale. Dedicated hosting provides high-performance servers for new crypto exchanges. However, since these physical servers reside in a remote location, they’re not as scalable as cloud servers. Dedicated servers 

Cloud hosting delivers customized servers over the cloud and offers an entirely virtual server environment — meaning it can scale with your growing business without requiring additional server warehouses. Cloud has dynamic scalability advantages while being higher on the cost side.

Ensure Technological Advancement

The crypto industry is constantly evolving, Keeping up with the latest technological advancements helps businesses scale securely and effectively to handle increased operational demands. 

For example, hackers continually evolve their methods to take advantage of crypto users. To keep customer data and user funds safe, a crypto exchange must stay up-to-date on the latest security measures. 

Know Your Customer (KYC) and Anti-Money Laundering (AML) are two of the most well-known crypto security protocols. However, as crypto regulations continue mounting worldwide, governments and regulators will introduce more security protocols to increase investor confidence.

Using the Highest Safety Standards

The more your business scales, the more security vulnerabilities will abound. Proactively finding the weaknesses in your security infrastructure can help deter hackers and safeguard both proprietary and customer data.

The best way to optimize your exchange’s security standards is to:

• Focus on achieving clean and secure coding that minimizes vulnerabilities and possible back-door entry from threat actors into customer wallets. 
• Perform regular audits to gauge the performance of your security infrastructure and smart contracts and make well-timed adjustments. 
• Deploy robust cybersecurity measures, such as backups, multi-factor authentication (MFA), and security patches. 

Around 75% of Americans are concerned about their online privacy and security. Building an adaptive security infrastructure helps ease your audience’s fears and motivate them to become customers. 

Comply with B2B Requirements

Crypto exchanges dealing with institutional clients naturally face greater regulatory compliance and security requirements than with individuals. For example, financial institutions require exchanges to have:

• Intrusion detection systems to stop brute force attacks immediately
• Intrusion prevention systems for anticipating and stopping cyber threats before the point of attack 
• Security information management systems to relay potential threats to authorized users and eliminate recurring attacks 

 

Achieving security compliance gives institutional clients the confidence to do business with your exchange. 

Create New Opportunities

Having an adapting crypto business doesn’t just mean scaling toward new user growth. Your business can also scale to offer new services to your target audience. For example, you can start off supporting Bitcoin and Ethereum, then scale to offer a broader range of digital currencies as your customer base grows. 

New initial coin offerings (ICOs) develop yearly, contributing to the thousands of cryptocurrencies available across the ecosystem. If a specific coin becomes popular, your exchange can provide new trading pairs. 

You can also expand your exchange’s trading services to include real-world assets (RWAs). Through tokenization, RWAs like artwork and real estate are becoming popular commodities on the crypto market. 

Optimizing Application Scalability

A significant part of growing a crypto exchange is optimizing application scalability. Generally speaking, application scalability refers to a system’s ability to handle an increasing load of users, data, and server resources, while maximizing reliability and performance. 

To maximize a system’s reliability and functionality, it’s crucial to ensure that specific application components can scale independently. So you should strongly consider utilizing a microservice architecture.

Microservices are stand-alone applications that communicate and link to each other using APIs. Microservices combine to make up an entire application, and you can customize them to scale without excessive configuration and custom software development. 

Load Management With Sharding

Crypto exchanges read and process millions of transactions every day. To manage these hefty loads and improve performance in real time, exchanges can rely on sharding. 

Sharding and replication is a load management strategy that contributes to higher availability of crucial data. By sharding information into horizontal datasets and replicating at scale, an exchange keeps user data readily available. 

However, while replication can result in improved query performance and efficient resource utilization at a database level, this high level of data availability puts additional pressure on data management systems, and avoiding database use for trade functionality is preferable to ensure stability during peak usage.

Best Practices for Managing User Growth

As your user base grows, here are some strategies for making sure your crypto exchange meets increased user demands. 

Anticipating Market Trends

Staying on top of market trends is essential for preparing your exchange for sudden traffic spikes and user influxes. For example, if the crypto market endures a bull run, the logical outcome is that investors will rush to available exchanges to make transactions. 

So your exchange must be ready for a traffic spike during a massive bull run. Preparing your servers for the crypto bull market ensures your trading platform will stay online to take advantage of a new influx of business. 

Preparing for Regulatory Changes

Cryptocurrency market regulations differ depending on specific regions and jurisdictions. For example, crypto regulations aren’t as strict in the United Kingdom as they are in China. 

As your user base expands to different countries, you should be mindful of the regulations your business will face. Otherwise, you could face stiff consequences and penalties for non-compliance. 

When scaling your crypto venture into new territories, you should perform an extensive check for regulations concerning cybersecurity, financial reporting, and tax law. 

Strategies for Maintaining Performance During Peaks

The crypto market has traditionally been volatile. Peak trading periods can happen anytime, and crypto-based businesses must adequately prepare to shoulder the load. 

Through efficient coding practices and scalable infrastructure solutions, a crypto exchange can handle peak cryptocurrency trading periods with near-unlimited uptime. 

AlphaPoint provides adaptable white-label exchange software designed to effortlessly handle the crypto market‘s highs and lows. Instead of reconfiguring your infrastructure from the ground up when an issue arises, you can rely on AlphaPoint’s modular architecture that supports all performance levels.

Ensuring Customer Satisfaction and Trust as the User Base Grows

Finally, growing crypto businesses should always focus on improving their platform’s customer service. The best way to deliver top-notch customer satisfaction is by elevating performance consistency and transparency. 

Simply put, your job is to ensure your platform offers an unparalleled trading experience and customer support. Providing regular company notifications and announcements is essential to maintain accountability and build confidence in your business.

How Can AlphaPoint Exchange Software Help You?

Building a profitable crypto exchange requires scalability. As your business grows, you’ll need to scale your architecture to meet changing business and user demands. 

By leveraging battle-tested financial technology (FinTech), you can set your crypto exchange up to scale effortlessly — and that’s where AlphaPoint comes in. Our white-label exchange technology is designed to accommodate large user bases and high transaction volumes.

AlphaPoint provides a highly customizable modular architecture to accommodate all performance levels. With a configurable order book management system, instant access to a global network of liquidity, and SDKs for rapid integration, AlphaPoint has the systems you need to scale your business and deliver an exceptional user experience. 

Ready to see how AlphaPoint can set your crypto exchange up for success? Request a demo today.