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Creating a crypto exchange from the ground up is a challenging task that requires significant resources and expertise. While it may appear simple at first , the reality is that it demands a great deal of knowledge and a robust infrastructure to operate efficiently. Unfortunately, many exchanges fail on a daily basis because they are hastily built and lack the necessary experience to succeed.

Lets focus on the most important features that a Crypto Exchange must have:

One of the most important features is spot trading. Spot trading is the most common type of cryptocurrency trading and is usually conducted on centralized cryptocurrency exchanges that facilitate trading between buyers and sellers. Currently, there are many exchanges that provide crypto spot trading some of which are, Binance, Coinbase, OKX etc. It is the most popular offer to beginners that are looking to make their first trade.

The next must have feature is crypto derivative trading.  In crypto derivative trading, traders do not need to own the cryptocurrency they are trading the underlying asset, and they can take both long (buy) and short (sell) positions. Crypto derivative contracts are usually settled in stablecoins rather than the actual delivery of the underlying asset. Volumes from the derivative trading are many times higher than the volumes generated from Spot Trading. Crypto derivative trading is more complex and risky than spot trading, as it involves trading on leverage combination of predicting the future price movements of cryptocurrencies, which can be volatile and unpredictable. However, it also provides traders with opportunities to hedge against price fluctuations, take advantage of leverage to amplify their gains, and trade in a wider range of markets.

EARN feature connected to DEFI wallets is a must for crypto exchange platform. One of the most advantageous features of crypto is that you can EARN extra yield on your holdings. Crypto DEFI platforms are one of the most popular ways to generate yield on your crypto holdings. To generate yields there are multiple provisions: Staking , Providing Liquidity, Yield Farming, and last but not least Lending and Borrowing.  

Staking involves holding a cryptocurrency in a wallet or on a platform to support the network and earn rewards in the form of additional coins. Staking Ethereum, Cardano, Polkadot, and others is very  popular.

Liquidity provision to DEXs is also very popular. Depositing two different cryptocurrencies in a liquidity pool and, in return, you receive a share of the trading fees generated by the DEX. Examples of DEXs include Uniswap, PancakeSwap, and SushiSwap.

Yield farming is locking up your cryptocurrency in a smart contract to earn rewards. Yield farming can be done in liquidity pools, lending platforms, or other DEFI protocols that offer rewards to users who provide liquidity or take part in certain activities.

By lending and borrowing your cryptocurrencies to other users on DEFI lending platforms such as Aave, Compound, or MakerDAO you can generate extra yields. 

Another important feature for a crypto exchange is to offer an Affiliate and Referral program. The main purpose of this essential feature is to incentivize existing customers or partners to refer new customers. Affiliate programs are for  individuals or businesses to promote the crypto exchange services and receive a commission for each referral made through their referral link. Referral programs are similar, but typically involve existing customers referring friends or family members to the crypto exchange for a reward or discount. The Referral and Affiliate program helps businesses to expand their customer base and reach new audiences through word-of-mouth marketing. By offering incentives to existing customers or partners, businesses can encourage them to share their positive experiences with others and generate new sales.Word of mouth marketing is the most trustworthy and cost-effective way for businesses to acquire new customers compared to traditional advertising and marketing methods. Instead of spending money on advertising, businesses can leverage the power of their existing customer base and incentivize them to spread the word about their product or service.

The topic of tokenization has been very hot in the last a couple of years. And, we can realistically apply it to crypto exchanges by offering traditional trading instruments such as forex, stocks, commodities, indexes etc. One more important feature to consider when you are thinking about building your own crypto exchange. 

Learn more about the best white label crypto exchange solutions here.

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