Starting a Crypto Exchange

Tuesday, November 24th, 2020

The crypto market is a multi-billion industry with ever-increasing global adoption, which makes starting a crypto exchange an increasingly appealing venture to many. 

In a report by Tokeninsight, the total trading volume of the top 300 crypto exchanges in Q2 2020 stood at $5.4 trillion, an impressive 25% YoY increase from Q2 2019. Major exchanges like Binance crossed a staggering $1 billion USD in cumulative profit as of September 2019 as well as numerous players flashing equally impressive figures.

However, before you rush into developing your own trading platform, we would like to share some insights that could save you substantial time and money.  

Steps to Starting Your Own Exchange 

Start your exchange with these essential building blocks in mind:  

  1. Choosing the Right Technology Partner
  2. Effectively Marketing Your Exchange 
  3. Creating Your Native Exchange Token 

1. Choosing the Right Technology Partner 

Building a Crypto Exchange in-house can be an extremely daunting task. Managing a dedicated team of developers, planning the product roadmap and constant technical troubleshooting are just some examples among the myriad of tasks necessary for project success. Not only will the developmental process set you back a year or two, it is also highly capital intensive, even more so if you lack experience in the field.  

That is why technology providers such as Broctagon offer white label crypto exchange software that enable new entrants to launch a fully branded crypto exchange seamlessly and instantly. 

What is a White Label? 

A white label crypto exchange setup is a tested and proven solution that works. It encompasses all the necessary elements for a hassle-free setup and removes the complexities from ongoing operations by providing upgrades, maintenance, and the options to customize.  In essence, white labelling is ideal for the quick launch of your exchange. 

Turnkey solutions typically include:  

  • Trading Platform 
  • Liquidity  
  • Risk Management 
  • Server Hosting 

When selecting a technology provider, it is important to identify one with demonstrated ability, as well as comprehensive offerings such as an exchange platform, liquidity with a wide variety of asset classes, solid backend infrastructure, agnostic API connectivity, proper risk management and cloud-based scalability.   

A trusted and experienced technology solutions provider can effectively eliminate redundancies and potential start-up pitfalls. 

Robust Liquidity  

Many providers can offer a sleek and intuitive front-end user interface (UI), but the real competition lies in the liquidity engine. Liquidity is pivotal for every cryptocurrency exchange as it presents opportunity for traders to enter and exit trades at favourable prices. Consistent liquidity provides sufficient market depth to allow users to execute orders quickly with ultra-tight spreads. A well populated order book and active trading activity also reflects the health of your exchange, with trading volume often a key parameter in distinguishing the top exchanges from the mediocre ones.  

Illiquidity is a common problem that many new cryptocurrency exchanges struggle to solve, often due to smaller user base and thus, orderbook. To address this, Broctagon has developed a proprietary liquidity aggregator and STP (Straight Through Processing) engine – NEXUS 2.0, that combines the orderbook of top exchanges such as Binance and Huobi direct in your Crypto Exchange with real-time upstream execution. 

Trading Technology Infrastructure 

A client’s trading experience with your exchange will be largely affected by the platform’s trade execution speed and accuracy. Besides liquidity, latency is the next key determinant of trade execution efficiency. An effective matching engine with strict price and time matching algorithms is essential in ensuring orders of all magnitude are smooth and swiftly executed. 

Scalable Cloud Servers 

For your exchange to welcome an increasing influx of users, server scalability is essential. Cloud servers are a popular choice as they are more cost-efficient and scalable than their on-site counterparts. By eliminating the need for physical infrastructure and installation, the overall time needed for setup, costs and manpower can be greatly reduced. With a cloud server, you can experience the versatility of a virtual server while being able to upgrade and expand your exchange capabilities anytime with agility.  

2. Marketing Your Exchange 

Marketing is essential for any business. Leverage on multi-pronged marketing techniques and various strategies such as Search Engine Optimization (SEO), content marketing, social media marketing, bounty programs and press relations. Adequate planning and budget for marketing is necessary to ensure that the initial rise of your exchange.  

User-generated content (UGC) is highly prevalent in the crypto realms due to dedicated fanbases and strong trending potential. With a huge number of crypto memes and topics created by the community, continual engagement and content sharing can help your exchange attain a wider reach. Another way of targeting different audiences would be through the usage of bounty or airdrop programs, where tokens can be awarded to users who complete simple tasks, such as joining your Telegram channels or by following your Twitter feed.  

Community Engagement 

An exchange’s success is also highly dependent on the loyalty of its community.  

Grow your presence by establishing rapport with the crypto community on social platforms such as Twitter, Telegram, Discord, Slack, Reddit and the BitcoinTalk forum. Statistically, Telegram and Discord are among the most popular messaging space for developers, blockchain and crypto enthusiasts, who regularly hold crypto-centric conversations, and keep up-to-date with the latest in the crypto world. 

Be available and actively manage your community by engaging in conversations, answering questions, responding to concerns, and genuinely considering feedback and ideas from the audience. The general community is especially fond of an interactive company, such as CEOs who jump into a Telegram chat or partake in an AMA on Reddit to engage with the community in real-time.  

3. Creating Your Native Exchange Token  

A native exchange token is an altcoin created for your exchange that provides exclusive benefits for your users, such as discounted trading fees, IEO airdrop participation, and other incentives that make it advantageous to hold exchange tokens.  

Even more importantly, having a native exchange token can massively increase the influence of your exchange, as evident from the current industry leaders of this business model, such as Binance and Huobi, where the native exchange tokens become an investible asset. This in turn raises not only the value of the exchange token but the valuation of the crypto exchange, with similar mechanics to an IPO (initial public offering) in traditional finance. 

Increasing Your Exchange Token Value  

The key to succeeding in the highly competitive exchange token scene is by building your token with proper liquidity management with a solid growth plan for it to be viable for users and attractive to investors and traders. Successfully managing your exchange token liquidity can prevent price shocks and help pave a positive price trajectory, increasing its credibility and value over time.  

Your Ideal Technology and Liquidity Partner  

With a decade of experience in the financial markets, Broctagon’s NEXChange crypto exchange white label solution is built upon battle-tested products in traditional financial markets, coupled with that latest innovation to make up the essential steps of starting a crypto exchange. This combined expertise is the reason why Broctagon is the preferred choice for many companies when it comes to reliable and cost-effective turnkey solutions. 

NEXChange: White Label Crypto Exchange Solution 

The essentials for your crypto exchange:

  • Swift trading platform setup on cloud infrastructure 
  • Pre-loaded with NEXUS 2.0: Industry’s First Crypto STP Liquidity Aggregator 
  • Additional capability of NEXUS Native Altcoin Liquidity Management System (LMS) 

Server co-locality  
NEXUS 2.0 deploys leased lines directly to upstream exchanges to ensure zero latency execution. 

NEXUS 2.0: Industry’s First Crypto STP Liquidity Aggregator 
Broctagon’s NEXchange comes pre-connected with NEXUS 2.0, the industry’s first STP crypto liquidity aggregator. Using Smart Order Routing (SOR) to achieve aggregated orderbooks with 24/7 best bid/ask prices, NEXUS 2.0 levels the playing field, allowing your Crypto Exchange to have equal or better offerings than any single top tier exchange. 

NEXUS Native Altcoin Liquidity Management System (LMS) 
Our latest feature, the NEXUS Native Altcoin Liquidity Management System (LMS) enhances exchange token liquidity by regulating supply and demand via algo-execution. By auto-regulating market price movements, the NEXUS LMS can effectively implement a successful token growth roadmap. Coupled with seamless API connectivity for linking your token price feed to major exchanges, we will pave the way to making your exchange token desirable to own and trade. 

Getting Started 

If you would like to launch your very own crypto exchange, Broctagon is here to kick-start your journey with a turnkey crypto exchange centred within a complete ecosystem to rival industry giants right from Day 1.  

Schedule a demo with us today: https://broctagon.com/contact

About Broctagon Fintech Group

Broctagon Fintech Group is a multi-asset liquidity and technology provider headquartered in Singapore with over 10 years of established global presence in China, India, Russia, Cyprus, Hong Kong, Thailand and Vietnam. With our decade of serving satisfied clients in 50 countries, Broctagon is well-equipped to elevate companies through performance-driven and flexible turnkey solutions such as our liquidity aggregator technology, brokerage technology solutions, and enterprise blockchain development.

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