System Overview
Technologies used and created by the Yellow Network team
Yellow Network: state channels; P2P network
Yellow Nodes: Jamstack, Golang, Next.js, gRPC
The Broker Node
The broker node is built with OpenDAX™ WEB SDK, which offers reusable UI components for common exchange platform interfaces, including widgets.
All components come with a simple, modern design, and are customizable.
The library leverages React state management tools such as providers, hooks, and utils to connect to the OpenDAX™ WEB SDK for JavaScript and pass data to the UI layer, simplifying state synchronization.
Demo Version - alpha.yellow.org
Functionality
MetaMask Sign In.
Deposit /Withdraw (custody contract).
Spot Trading (local node, network trading in progress).
Broker Admin Panel (Supabase Studio).
Modular Architecture
A great fit for exchange businesses allows deep customization.
Worldwide accessible assets of any type.
Secure, customizable, and easily localized.
Ultra-high-speed performance.
Matching Engine
Each broker has its own matching engine, called Finex, a high-performance trading engine of the OpenDAX™ crypto exchange software stack. It is written in GO language for high throughput of orders and trades. The Finex engine is the core component of the trading platform. It accepts or rejects orders, adds them to the order book, processes trades when orders match, and keeps a persistent state in the database. It prevents users from spending more funds than are available on their balance.
Features supported in Finex spot matching engine:
Bulk orders to post or cancel many orders in a single request
Post-only order: advanced limit order which will not match immediately; it guarantees that it will be filled or canceled
Fill or kill order: an advanced limit order which must be fully filled or gets automatically canceled
Stop-loss: advanced market order used to buy or sell a specific asset once the market reaches the limit price. Once the predefined limit price is achieved, the system creates a spot market order.
Stop-limit: advanced limit order used to buy or sell a specific asset at a predefined limit. Contrary to the stop-loss order, a stop-limit order creates a limit order instead of buying the asset outright once the limit price is achieved.
API Rate limit: a rate limiter configurable depending on user roles; it can be configured at the API server level and the trading engine level
Bi-directional WebSocket API: allows end-users and brokers' bots to create and cancel orders and be notified about trades in real-time
State Channel Technology
The state channel protocol keeps track of assets owned by brokers, without involving blockchains in trade operations, in an ultra-fast and secure manner.
The state channel technology creates a metadata index over the liquidity and digital assets on any blockchain, and can add liabilities to it.
Two brokers open a trading channel using state channel technology, to share liquidity and order books.
They deposit collateral in a smart contract called the adjudicator, which serves as an independent, neutral clearing house or intermediary; it also safeguards the collateral to ensure a fair outcome.
Brokers can close the trading channel or trigger a settlement process at any time to honor a withdrawal request by the end-user, or if the value of the underlying assets becomes unbalanced.
Brokers are required to lock $YELLOW tokens to open channels with other participants. Once a channel is closed any $YELLOW tokens can be unlocked 30 days after the last trade conducted on the trading channel.
Read more about how we use state channel technology for our smart clearing protocol.
Electronic Communication Network (ECN)
Yellow Network implements a mesh and decentralized ECN.
An electronic communication network (ECN) is a computerized system that automatically matches buy and sell orders for securities in the market. ECN trading is especially helpful when participants in different geographical areas wish to complete a secure transaction without the use of a third party.
The ECN aggregates the books of brokers and market makers in different locations. This leads to deeper liquidity and larger order books and thus a tighter bid-ask spread and faster order execution. Traders can get more attractive spreads and better order flow.
An additional benefit of the ECN's order aggregation is better price transparency for all participating brokers and market makers.
Using an ECN counters market fragmentation issues, while maintaining the decentralization aspect of the crypto trading market.
[INSERT: ECN Deal Flow Graphic (in preparation)]
ECN provides brokers access to global financial markets; the Yellow Network protocol forms a decentralized ECN for digital assets.
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