It is not uncommon to see cryptocurrency exchanges struggle to handle traffic during peak times. India’s WazirX suffered from some minor outages earlier this week. Some trading pairs remained unaffected, but users were not too happy with the overall performance.
WazirX Faces Some Setbacks
India is a very peculiar country when it comes to Bitcoin and other cryptocurrencies. Even though trading is allowed, the government can change its mind at any given moment. Tensions have flared up in recent years, resulting in numerous attempts to “ban” crypto trading, only to undo them weeks later. For a country plagued by financial turmoil, banning cryptocurrency activity might not necessarily be the best idea.
For WazirX, one of India’s prominent cryptocurrency exchanges, the recent market crash created a strong wake-up call. As prices were dropping by over 40% for most assets, traffic on the trading platform exploded exponentially. Users could buy and trade certain currencies via the mobile application, yet other functionality was inaccessible. Charting, for example, was unavailable for a while, although it did not impact the majority of trading activity in the slightest.
As prices kept dropping lower, more and more people attempted to buy the dip on WazirX. An increase in traffic by 400% is significant, putting a strain on the underpinning infrastructure. The exchange team will bring additional hardware online and upgrade the exchange’s Project Raftaar trading engine to avoid future issues. Trading platforms must remain competitive at all times as users will not tolerate any outage.
Issues like these are not unique to WazirX, however. All of the significant cryptocurrency exchanges crumbled under the traffic a few days ago, although most of them could restore services relatively quickly. Even today, the markets are still trying to find solid footing, yet the bearish pressure remains in place. Until Bitcoin and Ethereum begin moving up again, alternative markets will likely see increased volatility.
DEXes Aren’t Always The Answer
In situations like these, the apparent solution to the problem is to decentralize everything. Centralized exchanges are known for having issues during peak times, no matter how much infrastructure they put into place to handle everything. For WazirX, the current upgrade plan may prove sufficient for a while until the next major bull or bear run occurs. Decentralizing exchanges can solve many issues, but it is not a perfect solution either.
During this recent market crash, decentralized exchanges such as Uniswap saw an increase in trading volume. Unfortunately, the exchange is part of the Ethereum network, resulting in fees of up to $400 to complete a trade. Far from an ideal situation, even if the platform itself remains accessible without issues. Paying an arm and two legs to convert from one currency to the next is not a viable approach.
It may take a while before decentralized exchanges can truly rival their centralized counterparts. Having a decentralized infrastructure is a bonus, but it will only work if the underpinning network has acceptable fees and fast transactions. Ethereum lacks both, for now, but the future upgrades should help alleviate concerns and bottlenecks.
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