In the domain of cryptocurrency trading, the architecture and operational strategies of an exchange are crucial to its success. At the Aeron MeetUp in New York in November 2024, Frank Yu, Director of Engineering at Coinbase, shared insights into his long-standing use of Aeron, dating back to 2015, and why the firm selected Aeron for their digital asset crypto exchange.
In this blog, we summarize the main highlights, focusing on the technical requirements of a crypto exchange, key challenges, why Aeron was chosen, and the outcomes of this strategic decision.
Technical requirements of a crypto exchange
To understand why Coinbase chose Aeron, it’s essential to look at the technical requirements that a crypto exchange must meet. These requirements ensure the platform operates efficiently, reliably, and can scale with market demands.
A crypto exchange must:
- Process transactions with predictable low latency and high throughput to provide a seamless trading experience.
- Operate 24/7 with very high availability, handling hardware and software failures gracefully to maintain continuous service.
- Be correct and fair or face regulatory ramifications; ensuring data integrity and fair access is crucial for maintaining an equitable trading environment.
Exchange clients essentially outsource their software reliability and recovery to the exchange, relying on it to handle order cancellations on disconnects to prevent overfills and backfilling large amounts of data in the event of a disconnection. This underscores the high stakes involved in maintaining a reliable and robust platform.
Why Aeron for crypto trading?
Coinbase’s logic on Aeron is single-threaded which is great for an easy-to-use and debug development pattern. Moreover, the company wanted to solve the challenge of 24/7 trading with four to five nines uptime. Aeron was the natural choice to achieve these mission-critical outcomes of uptime and low latency.
The team has been using Aeron technology for over 8 years. It is integral to multiple high-performance exchanges they’ve built over the years.
- Open source: Open source was a key reason Coinbase chose Aeron and why it remains at the core of its DNA. Using open-source technologies provides greater transparency and fosters collaboration with maintainers, allowing the firm to help shape the roadmap.
- Deterministic execution: Aeron’s deterministic state machines and sequenced message log simplifies troubleshooting and testing. It allows behaviour to be deterministically repeated and analysed, making it easier to identify and resolve issues; this drives exceptional levels of uptime.
- Enhanced performance: Aeron Cluster facilitates consensus with minimal messaging overhead, ensuring the exchange can handle high transaction volumes with low latency.
- Cost optimization: Aeron enables the strategic replication of compute instead of data, optimizing operational costs, particularly in terms of network usage. This helps manage expenses while maintaining high performance.
Coinbase Matching Engine – technical set-up
For a detailed overview of Coinbase’s implementation, including insights into the cluster design, replication of compute and use of AWS Cloud (learn more about Aeron’s performance on AWS Cloud here), please watch the full recording.
← Watch Coinbase at the Aeron Community MeetUp
Challenges discussed:
- Network egress and ingress costs: Managing data transfer costs, esp. in cloud environments, is a challenge. Costs quickly add up, impacting the operational budget.
- Replicating compute vs. data: Deciding when to replicate compute instead of data to optimize performance and cost is complex. This decision impacts how efficiently the system can scale.
- Multi-Cluster complexity: Ensuring seamless communication and synchronization between multiple Aeron Clusters while maintaining high availability and performance adds a layer of complexity.
What’s next for Coinbase
- Having launched the Coinbase derivatives exchange, Coinbase also introduced the Coinbase International exchange, based on multiple Aeron clusters, with 24/7 trading and real-time settlement of trading proceeds
- More creative compositions with Aeron Cluster
- Leveraging more premium features such as DPDK, Aeron Cluster Standby, and more…
Frank Yu
Director of Engineering
Coinbase
Frank is a Director of Engineering at Coinbase, focusing on Exchange Platforms. He has been working on Core Exchange Systems for over a decade and is passionate about testing and scaling high performance services.
The company serves both retail and institutional investors, offering a range of services.
Coinbase went public in April 2021 and continues to expand its offerings, including staking, NFTs, and blockchain-based financial services.