Introduction to OpenDAX – A Fast, Secure & Highly-Scalable Open-Source Crypto Exchange Engine
OpenDAX is a modular platform for building, deploying and managing crypto exchange services. It is fast, cost-efficient, and has a built-in liquidity solution that can scale to demand. This article aims to understand the OpenDAX platform and learn how it solves problems of the Fintech exchange ecosystem.
Introduction
Starting a crypto exchange platform is a difficult & risky business endeavor, primarily due to two reasons. First is the cost required for developing and maintaining the software infrastructure, and second is obtaining the crypto liquidity to make the exchange functional. It only gets more difficult when you realize the crypto exchange landscape is highly-competitive and the major chunk of market share lies with the big exchanges who fight for slivers of user share and liquidity.
This situation has siloed the entire crypto space and has kept new exchanges or brokers from entering this space. OpenDAX is a unique white-label exchange software built to resolve this problem. It is a self-managed cloud-native solution that cuts down the cost and resources required in building, managing, and bringing liquidity to exchanges. OpenDAX takes care of everything under the hood so that you can focus on the growth of your business.
Let’s dive deeper to understand how the OpenDAX platform can help you achieve your business goals and what business problems it solves.
About OpenDAX & Yellow Network
OpenDAX is a crypto brokerage engine platform you can use to build your cryptocurrency exchange. It includes a self-hosted solution for enterprises, a managed crypto exchange platform on the cloud, and a free solution for developers with complete access to public repositories.
The UI components of OpenDAX are freely available as part of the WebSDK – which can be used to create custom design configurations for the platform. Additionally, most of the OpenDAX stack is highly open-source and is based on technologies like Supabase, Next.js, and React. All these things together make OpenDAX super extensible and customizable (to be covered in later articles).
OpenDAX is still a product in development, and would soon come with built-in shared liquidity with the support of Yellow Network. The Yellow Network is a peer-to-peer mesh overlay that interconnects multiple blockchains through state channels. In doing so, it unlocks the liquidity of isolated networks and provides lightning-fast trading speeds. After the public release of the Yellow Network, brokers would be able to harness this deep cross-chain liquidity on their OpenDAX nodes.
Together, OpenDAX & Yellow Network will provide a strong self-managed & supportive ecosystem for crypto exchange businesses to work on, so they only have to focus on their business growth and ideas.
What Makes OpenDAX Special?
OpenDAX abstracts away the complexities of handling & operating a crypto exchange by providing handy and user-friendly tools. Here’s everything that makes OpenDAX special as a crypto brokerage platform.
Quick Setup
OpenDAX is available on AWS, GCP, Azure & Digital Ocean as a pre-configured image you can launch in about 15 minutes. The setup requires only the basic knowledge of cloud platforms, while the OpenDAX interactive installation package takes care of the rest.
Hybrid Model
OpenDAX is hybrid in design, as it provides the security and transparency of decentralized exchanges with the speed and immense liquidity pools of centralized exchanges. For brokers OpenDAX provides the same easy user-interface as any CEX, while giving users the advantage of the extra security. It is the best of both worlds.
State Channels
State Channel is a cutting-edge virtualization method that takes data and processing off-chain to facilitate fast transaction speeds and cross-chain support. This technology allows OpenDAX to fill orders while allowing precise high-frequency trading.
Aggregated Liquidity
By becoming a part of the Yellow Network as a broker, you can aggregate deep liquidity for your crypto exchange, saving you from investing any capital in market makers or other solutions.
Hassle-Free Maintenance
Maintaining cryptocurrency exchanges is difficult as it requires the maintenance of individual blockchain nodes. OpenDAX cloud is a managed solution that takes care of everything under the hood so that you can focus on the business side of things.
High-Performance
OpenDAX was designed with performance in mind. Its matching engine can quickly and accurately fills trade orders. OpenDAX Kubernetes pods can also scale with your business as the demand grows.
OpenDAX’s Tech Stack
OpenDAXv4’s tech stack is highly modular, and the entire exchange engine is based on the microservice architecture. Individual components are loosely coupled, and there’s no risk of accidentally breaking the software should you try to extend it.
It also means that the system is fault-resistant and self-healing – since microservices don’t rely on each other, and there’s no hard linking.
Customizable Frontend & Backend
The front end consists of the trading UI, wallet management service, and administration interface for low-level control over the exchange. The UI components used by OpenDAX are the same as those present in the WebSDK. These components are coded in React and can easily be customized or extended with other components.
The backend consists of the Finex trading engine, which performs order matching at lightning speeds, and smart contracts that take care of the user fund deposits and withdrawals. The front end and back end are tied together through Next.js, a full-stack react framework where you can create your APIs, pages, and endpoints, giving you complete control over the customization of your exchange.
The benefit of using Next.js over plain React and Node.js is SSR or Server-side rendering. Your exchange is going to perform well, even on low-spec client devices. It also means your exchange would benefit from search engine optimization (SEO) as SSR renders pages in a static-like manner that is friendly to the Google spider bots.
Authentication, APIs, and Key Management
For secure key management, OpenDAX comes integrated with Vault – an industry standard for securing keys and other secrets. GoTrue is used to authenticate all APIs, while Kong serves as a gateway and helps in scaling those APIs.
OpenDAX also comes integrated with Supabase – an open-source Firebase alternative. It is a BaaS (backend as a service) tool that helps you create and manage your software's APIs.
Maintenance & Scaling Infrastructure
Docker is a DevOps containerization service that separates your code from the infrastructure it depends on. Docker is often coupled with Kubernetes, which helps you rapidly deploy, scale and manage your containers. Together, they administer rapid software delivery and take care of its scaling.
OpenDAX comes pre-configured with these tools, and they take care of the scaling as the demand for your software grows. It also means you can create production-grade workflows for your development team if you plan to extend the software stack.
Cloud Native
Hosting an exchange on bare-metal servers is cost and resource-intensive, so OpenDAX has been developed as a cloud-native solution. OpenDAX is available as a free image on AWS, Azure, and GCP, and you are only required to pay as you use the hosting. It also means you don't have to worry about scaling, downtimes, or other security threats, as these cloud services take care of protection and reliability.
If you want to try the installation immediately, check out the step-by-step video guide for the OpenDAX v4 mainnet installation:
Key Benefits of OpenDAX
The crypto exchange ecosystem is plagued with many technical problems that have made launching and operating crypto exchanges difficult. OpenDAX aims to resolve these issues.
If you like it visual, here’s an OpenDAX v4 video webinar by Openware CEO & Founder Louis Bellet:
KYC & AML Compliant
Even now, compliance remains a huge problem in the crypto exchange space. And although KYC and AML solutions exist, standards vary across countries. OpenDAX comes with a KYC integration protocol using which you can easily use a KYC supplier service with your exchange.
You can also customize these solutions to suit your own needs.
Cutting Down Business Costs
Because of the other benefits of OpenDAX in infrastructure, development, security, and liquidity, it can massively cut down the cost required to launch and operate a cryptocurrency exchange business. That includes minimizing OPEX & CAPEX costs, making OpenDAX stand out from other similar solutions.
Perfect For Businesses of All Sizes
Whether your exchange is operating globally or is serving a small area, OpenDAX can scale to serve audiences of all sizes. OpenDAX can be operated by small and large teams, making it easier to start a crypto exchange business.
Final Thoughts
This article sums up the OpenDAX crypto exchange platform and its technical and business benefits. If you have any doubts or queries regarding the engine, feel free to reach out to the extensive OpenDAX community. In the upcoming articles, we will explain how you can deploy, manage and extend an OpenDAXv4 mainnet instance on the cloud of your choice.
Feel free to experiment with the installation, ask your questions to the community, and let’s build the Web3 Internet of Finance together!