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Core Components to Build a Crypto Exchange

  • aliza kidd
    • 2 posts
     
    April 15, 2025 9:50 PM CDT

    1.Business and Legal Setup

    • Regulatory compliance: This is critical. You'll likely need licensing depending on your country (e.g., FinCEN in the US, FCA in the UK, etc.)

    • KYC/AML integration: Use providers like Sumsub, Onfido, or Jumio.

    • Legal counsel: Get someone who understands fintech and crypto laws.

    2. Architecture & Infrastructure

    • Frontend (UI/UX): Clean, responsive, and fast. Users expect a sleek, real-time trading experience.

    • Backend:

      • Order matching engine (the heart of the exchange)

      • Wallet system: Hot & cold wallets; ideally use MPC or multisig security.

      • User account management

      • Trade history & ledgers

    • APIs: For bots, traders, and integrations (REST & WebSocket).

    3. Security First

    • Cold storage for most funds

    • DDoS protection (e.g., Cloudflare)

    • Rate limiting, anomaly detection, anti-phishing measures

    • Regular audits

    4. Performance Requirements

    • Ultra-low-latency order execution (sub-millisecond matching engine)

    • High throughput (handle thousands of transactions per second)

    • Real-time market data updates (via WebSockets)

    5. Tech Stack (Example)

    • Frontend: React.js / Next.js

    • Backend: Node.js, Go, Rust, or Elixir (for speed)

    • Database: PostgreSQL, Redis (for in-memory ops)

    • Messaging: Kafka, RabbitMQ

    • DevOps: Kubernetes, Docker, AWS/GCP

    6. Liquidity

    • Connect to other exchanges via APIs (Binance, Kraken, etc.)

    • Or work with a market maker

    7. Monetization

    • Trading fees

    • Listing fees for tokens

    • Margin trading (optional but regulatory heavy)