Connectivity Tools, Technologies and Approaches in Crypto and Web 3.0

Introduction

As part of our upcoming Project Fusion, a series of adapters are required in order to connect our services to those provided by centralized exchanges, decentralized exchanges and beyond. In this article, we will explore some of the key technologies behind the task ahead, as well as a number of existing solutions throughout the spaces of crypto and traditional markets.

CEX and DEX Adapters

The purpose of the CEX and DEX adapter is to allow for a direct communication route between our IDE and the exchanges. The IDE will be able to operate multiple accounts and place orders directly to any of our supported exchanges simultaneously.. While solutions for connection to multiple exchanges do exist, it is often not very well documented publicly and the vague terminologies in crypto space make searching for solutions often frustrating. Additionally, some protocols claim to be solving similar problems in their whitepaper, currently available products are not still in development.

SFOX

Sfox is a CEX aggregator with an adapter connecting to several centralized crypto exchanges. By aggregating multiple CEXs on one platform they give you the ability to trade on all major exchanges from a single account with low-latency, automatically slicing your orders and routing them to the most competitive venues for a better price. Instead of having to decide on which is the best exchange to be trading on at any given moment, Sfox draws data from several CEXs and creates a unified order book and will intelligently place your order on the best exchange when executing orders.

FINXFLO

Finxflo is another company that has aggregated multiple exchanges, this time in both the CEX and DEX ecosystems. They are a hybrid liquidity aggregator that allows its users to access the best prices from both CEXs and DEXs. Like Sfox, when users trade on the FinxFlo platform they are effectively trading across multiple exchanges and benefiting from the combined liquidity which mitigates any price discrepancies and minimizes slippage.

Swapzone

Swapzone is an instant non-custodial cryptocurrency exсhange aggregator. They “monitor the best exchange rates for thousands of available cryptocurrency pairs supported by exchange providers and gear you up with the information on the crypto exchange offers and services so that you could pick the best and convert cryptocurrency instantly, with low fees and no registration.”

Soft-fx

Soft-fx provides a similar platform to the examples above, but deals in both FOREX and crypto space. They provide a cryptocurrency trading platform described as an all-in-one application for margin trading and exchange of Crypto and derivative trading instruments. With features of: Advanced Trade matching engine, FIX API, REST API, and Web Sockets API support, and Algorithmic studio with preset Market Making algorithms.

Orion Protocol

Orion Protocol is a decentralized liquidity aggregator protocol that bridges the gap between the centralized and decentralized crypto platforms. Orion Protocol aggregates the liquidity of CEXs, DEXs, and swap pools into one decentralized platform. The protocol aims to connect traders to the entire crypto market via one interface.

O3 Swap

O3 Swap is a liquidity aggregator for DEXs. They describe itself as a “cross-chain aggregation protocol that enables free trading of native assets between heterogeneous chains by deploying ‘aggregator + asset cross-chain pool’ on different public chains and Layer 2 granting users access to cross-chain transactions with one click”. Unlike most companies/protocols here, O3 swap does provide a list of where the liquidity for each of its asset pairs come from.

0x

0x is a peer-to-peer exchange of ERC-20 tokens and can be thought of as its own DEX. 0x founders describe their system as an “off-chain order relay with on-chain settlement” and it’s often refers to its solution as the “Craigslist for cryptocurrencies,” in that any developer can build their own cryptocurrency exchange and post onto its platform.

Hummingbot

Hummingbot is an open-source software client that offers users the opportunity to create and monetize automated and algorithmic trading bots. It provides an easy-to-use command-line interface that makes it possible for you to configure, customize, and run automated bots and other strategies. With this, users can make markets on both decentralized and centralized digital asset exchanges. As the project is open source, documentation is thorough and public and would serve as a good base for any project with the goal of aggregating multiple crypto exchanges.

Smart Order Routing

Smart order routing (SOR) is an automated process for handling orders with the intent of attaining the most desirable path across venues. Generally, an SOR searches for the most efficient route to swap tokens for another token type.

Uniswap Auto Router

Uniswap’s automated liquidity protocol allows users to swap one asset for another. To facilitate this, they have implemented an auto router which makes a series of swaps across multiple pairs (the ‘route’) to attain the desired set in the event of a trader creating an order for an asset that is not included in the pair pool they are trading through.

SFOX Smart Routing and Net-Price Routing

Balancer

Balancer’s SOR solution is an “off-chain linear optimization of routing orders across pools for best price execution”. It takes an amount of input tokens and desired tokens to trade them for, then returns a list of pools and amounts that should be traded to maximize the amount of returned tokens. The tool is available for free as an npm package for use by developers who aim to implement order routing across pools.

  1. There is a pool with exactly that initial spot price
    OR
  2. The spot prices of two pools ‘cross’ at that price

Order Matching Engines

Order matching engines are used to ‘match’ limit orders to market orders, this system is used in traditional finance and centralised exchanges to a great extent. However, as our adapter system will be connecting to multiple venues an order matching engine is essential for DEXs and other smart contracts, an order matching engine is required to ensure optimal trade execution.

Market Grid

Market grid is a order matching system for traditional finance, their building process consists of three steps

  1. Build the Data Model. The first step in building a MarketGrid system, before a line of code is written, is to build the data model.
  • Matching Engine Code
  • Communications Gateway
  • Static Database
  • Market Database
  • GUI — HTML based
  • Capable of 190,00 Orders Per Second.
  • Intel Core i7–2600K (SandyBridge) @ 3.4GHz
  • 16GB DDR3 RAM @ 1333MHz
  • CentOS 7.1 Linux

Exberry

Exchange-grade customisable tool for matching supply and demand on a wide range of asset classes — from limited edition fashion items to prediction markets. Light to deploy, and easy to integrate, operate, and scale as necessary. The website provides very limited information on the performance and architecture of their system.

Devexperts

DXmatch is a modular system built for launching exchanges and dark pools that operate in OTC (FX and crypto), commodities, and regulated equities and derivatives markets.

  1. Sub 100-microsecond end-to-end latency via FIX API
  2. Throughput of 500,000+ orders per second through up to 128 horizontally scalable matching segments
  3. Hardware-accelerated Direct Memory Access (DMA) zero-copy networking for ultra-low latency
  4. Runs on bare metal or in the cloud

B2 Broker

A Matching Engine is the core mechanic of a digital exchange which matches up bids and offers to execute trades. The ME algorithm keeps a record of all open orders in a market and generates new trades if the two orders can be fulfilled by each other. It provides solutions for traditional finance. They boast speeds of 15,00 OPS at 50us latency. B2 Broker also provides highly tailored data for brokerage related information such as Balances, User Activity, Commissions, Dealing and Transactions. This data is essential in a decentralised space where data can make or break trade decisions. The system employs the following system, architecture:

References

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GDA is developing the decentralized financial application development environment and rapid financial engineering protocol built on Ethereum.