Technology is LGO’s first asset.
From day 1, building an institutional-grade infrastructure for exchanging digital assets has been our prime focus. In March 2019 we released the first version of our spot exchange - with an execution engine that has never failed us to this day, despite tens of thousands of orders placed each second on our platform by our clients.
In this series of articles, we will explain in further detail what lies behind the LGO platform, the technology, the challenges and the infrastructure choices that we’ve made along the way to build the best exchange platform in the cryptocurrency market.
The LGO Platform
LGO offers a digital asset platform that is transparent in its operation, guaranteeing fairness among market participants and the security of its clients' funds. LGO's trading platform is based on three fundamental criteria that serve as the foundation of our trading platform: functionality, performance and security. We seek to design a platform through a hybrid approach by combining both technological elements of traditional finance with elements provided by cryptography and the active crypto ecosystem. It is at the crossroads of these two ecosystems that the uniqueness of our platform lies.
- Gateway: Market data gateways that serve as the connection points between our clients and the platform so that they can place orders and receive updated market data. The number and type of gateways is scalable to the number of actors wanting to participate in the market.
- Transparency Module: Module allowing the audibility of execution system activity by market participants and regulators through the recording of public proof of order sequence.
- Pre-Trade Security: An order compliance check ensuring that the issuer of each order is financially capable of executing it.
- Execution Engine: The execution engine responsible for meeting the interests of the participants, i.e. "matching" the orders, to generate the trades.
- Market Data: This module calculates market data customized to each participant from the activity data generated by the Execution Engine.
- Accounting: This module is in charge of recording all financial transactions (trade, deposit, withdrawal, funds movement).
- Clearing & Settlement: System in charge of the delivery of the assets and carrying out the transfers of ownership according to the orders placed over the period.
An operational walkthrough
A digital asset spot exchange requires well-defined and secure technological elements. Above are the elements that are essential to the functioning of the exchange platform offered by LGO.
Firstly, the participant can interact with the platform through the three types of "Gateways", i.e. our trading API, our web UI and our desktop application, which provide access to Market Data. These gateways ensure client authentication, order reception, distribution and calculation of market data (specific to each client).
For any order that the participant seeks to issue, the message is first submitted to the "Transparency Module", which therefore receives all of the platform's activity. This module is dedicated to the audibility and transparency of the platform. It is in charge of creating and publishing an unalterable cryptographic proof of the future execution. To do so, a hash list is created and a public proof is generated and published on the Bitcoin network through the blockchain.
The "pre-trade security" mechanism is dedicated to the verification and compliance of orders before execution. The check focuses on the type of asset that the client wishes to trade, as well as the state of the client's solvency level.
If the “pre-trade security” module verifies the order and accepts it, the “Execution Engine” is responsible for matching supply and demand in order to generate the trades corresponding to the orders placed by our clients. The execution engine is based on an interest matching algorithm with price/time priority: the priority is first given to the best price and in case of competing offers, the oldest offer has priority for execution. This system runs completely in memory for performance reasons.
Finally, the "accounting" module takes care of the accounting reports and verifies that all issuers are financially capable of executing the issued order.
In the next article we’ll talk about the key challenge faced, but also the holy grail of any exchange platform: performance.
The LGO Technology Team