Mechanics of Crypto Exchanges

[DaC0nsumeR]

I want to dive into how crypto exchanges work, specifically regarding: matching, calculations, marks, recovery from downtime etc.

Where can I find this information?

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[hugeblack]

Your question is huge, and the answers will branch out based on the nature of the work of Crypto Exchanges, is it centralized or decentralized, and the rest of the details, but let's assume the following assumption:

How central platforms that accept payments in cryptocurrencies work and enable individuals to trade and withdraw cryptos only.

If we assume the previous model, the answer will be:

The platform is a huge central database, the user deposits and gets a balance on that platform, and everything that happens after that is an update of that database.

How do exchanges set their prices?
There is no central price, but the rules of supply and demand. The more orders, the more difficult and safe the price change, and vice versa.
Can it be hacked?
Yes, either scammers tamper with the database or control the withdrawals so that the platform becomes bankrupt.
How to store money? Mostly there are two types of wallets, a hot wallet where the private keys are connected to the Internet and a cold one (secure). The problem is that wallets need liquidity so that people can withdraw as they want, and therefore the possibility of hacking a hot wallet is more likely.

[joniboini]

There's no public info about that as far as i can tell. You can probably ask about it from an exchange script builder or something similar, but as mentioned above, not all exchanges work that way. One of the obvious reasons is due to security issues. If everyone knows how the exchange works in and outs, then the exchange might find a lot of trouble.

Things might be different with dex such as Uniswap though. You can take a look at the code and learn it by yourself as long as you know one thing or two about coding.

[crwth]

Are you possibly going to create your own cryptocurrency exchange?

Based on your question, you are most likely with software and you need to contact developers for that. I'm not sure how you are going to achieve that on your own but what I can think of that can help is that

• Trading software
• GUI of the site
• Wallet and cold storage
• Admin controls

[shield132]

This is the question that can't be answered by one person, it's a very, very complex task and there are multiple people involved in it.

Overall, their work principle is simple, exchanges connect the people who want to buy and who want to sell. Exchanges also have reserves and offer you to buy/sell instantly but in a different rate. This is the basic, then comes the Futures Trading, Margin Trading, Staking, etc. For example, Binance lets you to become a liquidity provider and you earn money from those people who lose in Futures trading.

There is an AMM Formula explained: https://www.binance.com/en/support/faq/33f38db8c23e4a0f949b5433cdc7193a

You can also find a lot of useful information in their FAQ question that should answer some of your questions: https://www.binance.com/en/support/faq/c-5?navId=5

[sheenshane]

I want to dive into how crypto exchanges work, specifically regarding: matching, calculations, marks, recovery from downtime etc.

Where can I find this information?

It's a very complicated question and I think this can't answer by a regular member here in the forum, it should be from an exchange developer team and how they will work to create an exchange.

But I found an article that gives you an idea on how to start to run your own exchange platform which is I assuming that this is what you meant for.
https://www.analyticsinsight.net/easy-steps-to-build-a-cryptocurrency-exchange-platform-in-2021/.

I suggest you find your own developer for this for a better answer.