Understanding Why Cryptocurrency Exchanges Can Face Outages

At Huobi, we pride ourselves on keeping any trading unplanned and unscheduled outages to an absolute minimum and have not had a major unexpect break in trading since we began operations. However, trading outages are something that happen to many traders across the crypto ecosystem and they are a bane as they often come at the worst times.

Recent news has seen a number of big crypto exchanges being struck with outages at times where the price action of Bitcoin and other cryptocurrencies are at a peak. Big price swings often lead to big trading volume and for some exchanges, this cannot be handled and an outage occurs.

This is a very basic understanding of why outages can happen, but we would like to educate further on other reasons that can cause outages in cryptocurrency exchanges. We know and understand these reasons because we work to stop them from happening even before they occur.

Outages usually come along with poor performance such as APP/API/WEB getting stuck, latency and even failure to place/cancel orders, because there are too many requests from the traders to proceed for the server (the exchange), thus the match system unable to load all these requests and finally “overloads”.

That’s the reason why many traders hate downtime in huge price movement because unexpected liquidations and therefore huge losses usually occur.

In 2020, many derivatives platforms have experienced some unscheduled downtime. For example, BitMEX had been at the center of attention earlier in March and May due to four outages, once time on Mar. 2, twice on Mar. 13, and one time on May 19 (about 75 minutes), which caused dramatic losses to its users.

Coinbase has also been struggling with outages this year as well, the US exchange also went down during a Bitcoin price collapse in early June. This comes after it also went down at the end of April when Bitcoin was surging.

How Huobi Futures maintains zero downtime

Huobi Futures shares the same system with Huobi Global which has over 7 years’ experience in providing digital asset service and the system of which there is high concurrency and low latency.

Huobi Futures also upgrades the system continuously. In order to cater for different users’ needs and to ensure high concurrency and low latency, Huobi Futures have conducted many system upgrades for faster processing speed and better performance on web, app and API.

On Mar. 5, the system on Huobi Futures was upgraded to V3.3.0, making the overall TPS increase by 50% and the overall proceeding speed increased 100%. Then, V4.2.0 came out in June bringing with it more system upgrades as well as bi-quarterly futures contracts.

Huobi Futures also has a mature risk control system which could help to decrease outage and liquidation to the minimum when the price fluctuates violently. The platform is also supported by a leading-edge technology team. Huobi Futures shares the same safeguard with Huobi Global to avoid potential attacks and to help decrease hack threats with separation of cold and hot wallets; multi-signature on KYC and ADL; a decentralized structure and an anti-DDOS protection system

When it comes to a derivatives exchange, apart from downtime, there is another common problem that usually occurs in a huge fluctuation market, which is clawback. In digital asset trading, clawback refers to profits that the traders have already earned are required to return.

As a circumstance occurs that a platform’s insurance fund cannot cover margin call losses, clawback brings losses to the profited traders because they have to pay back a certain percentage of profit to cover it. However, this problem rarely happened to Huobi Futures. Since its launch in 2018, Huobi Futures has maintained the zero clawback record even in the extreme market on Mar.12.

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Understanding Why Cryptocurrency Exchanges Can Face Outages
DexStrats 30 August, 2021
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