1. Introduction

A centralized exchange (CEX) is a platform that facilitates the trading of assets, such as stocks and cryptocurrencies, by providing a secure and efficient way for users to swap one asset for another. The exchange aggregates buy and sell orders in real-time, creating a marketplace where users can trade assets like INR for TATA stocks, or cryptocurrencies like ETH for BTC.

This exchange is designed to provide a seamless user experience by offering features such as a real-time price feed, an interactive orderbook, and an intuitive order placement UI. It functions as an intermediary, ensuring that trades are executed fairly and efficiently. Our platform will support both market and limit orders, ensuring flexibility and precision for all types of traders.

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2. Objective

The primary objective of this project is to create a robust centralized exchange platform that enables users to efficiently trade between various assets. The platform will:

• Provide a real-time price feed for all tradable assets.
• Maintain a dynamic and liquid orderbook, ensuring that users can buy and sell assets at competitive prices.
• Offer an intuitive order placement interface to facilitate the trading process for users.
• Support market and limit orders to cater to different trading strategies.
• Ensure liquidity through market makers, who will constantly place orders to maintain an active marketplace.
• Provide users with access to time-series data for historical price analysis and informed decision-making.

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3. Methodology

The methodology for building the exchange revolves around the following key steps:

1. Price Feed Integration: Integrate APIs that fetch real-time prices for tradable assets, displaying the latest market prices to users.

2. Orderbook Management: Set up a system that maintains an orderbook, which aggregates all the open buy and sell orders. This allows users to view the available bids and asks, facilitating efficient trades.

3. Order Types: Implement two types of orders:

   • Market Orders: Trades executed at the current market price.
   • Limit Orders: Orders placed at a specified price that execute when the market reaches that price.

4. Market Makers: Collaborate with market makers to ensure liquidity by constantly placing buy and sell orders, ensuring the orderbook remains active and trades can occur smoothly.

5. Order Matching: Create a backend engine that matches incoming orders with those already on the orderbook, ensuring the best possible trade execution.

6. User Interface (UI): Develop an intuitive user interface for placing orders, viewing market prices, and accessing historical price data.

7. API Integration: Replicate the API structure from existing exchanges, such as Binance, to facilitate features like order placement, fetching price data, and interacting with the orderbook.

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4. Technology Used

The following technologies will be employed to develop the centralized exchange:

• Frontend:

  • React.js for building a dynamic and responsive user interface that allows users to interact with the orderbook and place orders seamlessly.
  • Chart.js or D3.js for displaying historical price data and trends using time-series charts.

• Backend:

  • Node.js/Express for building the API and backend logic to handle order placement, matching, and interaction with external price feeds.
  • PostgreSQL for storing orderbook data, user accounts, and time-series price data.
  • Redis for caching frequently accessed data like the current price and the orderbook to enhance performance.

• APIs:

  • Binance API for price feed integration and structuring the order placement system.
  • Twilio (optional) for sending notifications or alerts about trades or price changes.

• Market Data:

  • WebSockets for real-time price updates and orderbook synchronization.

• Security:

  • OAuth 2.0 for secure user authentication and access management.
  • SSL Encryption to ensure secure data transmission between users and the server.

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