The cryptocurrency industry is relatively young but already aims to reach 1B by the end of 2022, which makes it very alluring for entrepreneurs. When thinking about what service to launch, a crypto exchange is what comes to mind first. And there is no surprise: exchanges offer a wide range of services, most of which are the most important in terms of finances, and accumulate a heterogeneous audience from experienced traders to newbies.
You can already imagine how difficult it is to build one from scratch: aside from developing software, one should find a liquidity source, provide custody, choose a jurisdiction to work under and much more. Luckily, there is another solution – whitelabel crypto exchange. It’s a turnkey solution that is already developed by companies to offer to a client who can rebrand, add a unique design with logo and choose instruments, features and assets that he/she needs.
What are the pros of a Whitelabel crypto exchange?
Let’s look at the main benefits that make whitelabel solutions so popular.
- The platform is tested. You won’t need to ensure that everything’s working right, because the platform was already used by clients. For example, Scalable Solutions is on the market since 2013, meaning that our technology is time-tested
- Fast setup. Building a cryptocurrency exchange from scratch will take you a year or longer, while a whitelabel exchange is already developed and only needs a quick setup, so one can enter the market much faster. At Scalable Solutions, the setup process takes around 6 months. (Lera).
- Ready-made solution. While developing an exchange, one should take many components into account: liquidity source, custody, security, and many others. An inexperienced (and sometimes even experienced) entrepreneur is sure to confront many problems, while a whitelabel exchange offers a ready-made solution where all the nuances are taken into account.
What are the cons of a Whitelabel crypto exchange?
- You are not the owner of the technology. It means that you can’t sell the technology and become an exchange software provider yourself.
- Some solutions provide a poor set of features. Not all platforms are built the same and provide an equal set of features. Some of them offer only basic structures, and some (Scalable Solutions included) provide a larger set of features to choose from and allows clients to have their own customization and branding.
- Some solutions lack scalability. Scalability is often the weak link of an exchange. Not every platform can scale while the number of traders and trading volume is soaring putting a heavy load on the system. But we can cope with it! Our solutions are modular and scale up with your business, so we fully justify our name.
Key points to focus on
Security is the main principle of all financial services, so pay close attention to whether a chosen exchange provides an appropriate level of security. Does it comply with AML? Does it have 2FA? Can you integrate a hardware wallet into it?
At Scalable Solutions, we went even further: we have our own innovative custody technology that is offered to our customers.
Interesting fact: being on the market since 2013, we repelled a lot of hacker attacks and have never lost a single penny of our customers’ funds, so “security is our top priority” is not just a bunch of words for us.
Many entrepreneurs face the problem with liquidity when choosing a whitelabel exchange. You’d better be careful when choosing a liquidity provider, as some of them have aggregated liquidity from multiple sources. It can result in low quality of liquidity or low liquidity levels on some trading pairs, resulting in order book imbalances, high volatility, and spikes in prices. Also, high volatility often leads to wide spreads. We recommend you choose an exchange with built-in liquidity but ensure it is deep.
Scalable Solutions is proud to provide connectivity to the deepest liquidity pool in the industry aiming at 10-15% of global spot liquidity. It results in a 0.01-0.02 spread on top pairs and a narrow spread across the book’s depth ensures a balanced orderbook.
One of the main things to consider is the functionality of the service itself. Ensure it provides all the necessary features: spot trading, margin trading, futures trading, etc. It would also be great for it to have some additional features like staking. It’s a benefit if it already has KYC and KYT providers, and on-ramp solutions to buy crypto for fiat.
Talking about Scalable Solutions software exchange, it provides spot trading, margin trading, futures trading, and staking. There’s a price chart and analytical tool from Trade view, the leader among crypto chart providers.
In regards to our technological partners, we have multiple KYC and KYT providers to choose from. Some of them are: Sumsub, Elliptic and Chainalysis. Also, we have fiat-to-crypto providers, such as MoonPay, Simplex and Mercuryo.
Pay attention to the technology itself, because a sophisticated trade engine provides low latency, as it matches orders very quickly.
Another factor worth mentioning is transaction speed, measured in Transactions Per Second (TPS). Our exchange’s TPS is 100.000 trades per second.
Additionally, it would be better for an exchange platform to have both desktop and mobile versions. We, at Scalable Solutions, offer a good adaptation of a desktop version for mobiles.
The question of interoperability is the cornerstone of crypto in general. It means that different blockchains, i.e. Ethereum, Solana, Near, and others can’t “communicate” with each other without Bridges. Applying to exchange, the platform needs to be working with multiple blockchains to provide many popular assets. Scalable Solutions’ exchange supports more than 120 blockchain and is blockchain agnostic, meaning that our solutions can literally support any blockchain.
A good exchange is able to handle large trading volumes along with large transaction volumes. It needs to have fast servers, nearly 100% uptime, and good support service. Only by having these key characteristics, can an exchange earn users’ trust and truly scale.
We at Scalable Solutions are proud to provide superior execution with less than 500 microseconds for collocation and 99.99% uptime.
Digital asset exchanges provide trading through bridging several actor needs: retail traders, institutional investors, brokers, and more. Communication and connectivity between these actors and exchanges also relies upon APIs. The majority of cryptocurrency exchanges use two mainstream API protocols: REST and WebSocket.
While both WebSocket APIs and REST have several use cases, FIX provides a comprehensive solution that is particular to trading of digital financial assets. FIX is the connectivity protocol specifically designed for global financial markets.
Scalable is one of the few to support the FIX protocol – standard in global financial markets, but unusual in the digital assets sector. It allows established financial institutions to integrate trading algorithms designed for traditional markets seamlessly into the world of digital assets.
Imagine a newby exchange operator who stays one-on-one with the highly technological solution not knowing what to do or a business owner who doesn’t really understand his own project. What can happen if a whitelabel solution doesn’t provide high-quality support.
Scalable offers a full scale training program, covering every component of the system, which prepares exchange operators to run the business smoothly. Scalable’s Customer Success Team is available to clients 24/7, answering questions,
communicating updates and system upgrades, and resolving any immediate B2B operational issues.
Choosing a good whitelabel exchange is a challenging task that requires lots of research. To make this process a little easier, try considering the above-listed factors.
Feel free to book a demo to know more about our products and ask any questions about your future business.