[jedberg]

I've seen that. I suspect the exchanges will never go for it for this exact reason -- they need downtime for maintenance. But if does go through, it will be a fun challenge to get 100% uptime!

I've always said that with infinite money we could get 100% uptime, but no one has infinite money. Trading firms are about as close as I can imagine to infinite money though.

[skippyboxedhero]

How do you think on-chain exchanges do it? Hyperliquid has 16 employees, not engineers...total employees. It is possible, it isn't going to be possible for many of the legacy exchanges.

I work with a major one and, being honest, from day one it was obvious they were incompetent. They employ a huge number of engineers and are unable to deliver basic features at any reasonable pace. Not even remotely close to it either (as in: you ask them to do something, they say yes, execs say yes, you get a deadline, date comes...deployment difficulties, environment not working, run around goes on and on forever).

I remember the CEO got on a call with us at the start and was slapping himself on the back saying they had no downtime...because they were able to do maintenance when markets shut (and have heard very bad things about how that goes). But it is 24/7 world now, our service is up 24/7 and, of course, this led to massive issues in time due to the very different expectations around delivery/quality. Our execs were impressed, our engineers said this was a bad sign. And, ofc, it transpired that they were total amateurs (to be clear, this is one of the biggest exchanges in the world) and were unable to deliver.

To come back to my original statement: there is a company of 16 people total who is, from the point of view of customers, delivering features faster. It is difficult to understate how insane that is.

[jedberg]

From what I've seen, on-chain transaction times are measured in seconds and minutes, not milliseconds. It's a lot easier when you have time to wait to process a queue.

[skippyboxedhero]

Fastest ones are processing a block every 10ms.

It depends what you mean by easy. Even if you are using a slow chain, you still have to compete for finite block space, you still have to work out how to risk/matching fast, etc.

With chains built for exchange use, operating them easier, that is why they don't require thousands of engineers. But the actual technical capability of the system is significantly in excess of tradfi exchanges. For example, risk function is real-time on-chain as opposed to EoD settlement. This significantly changes the possible feature set. Once you have built it, it is very easy...the question is why big exchanges rely so heavily on eod processes? The answer is: they are bad at engineering.

[foobar10000]

The EOD reconciliation (and corresponding inability to settle a position in milliseconds) is a feature - it allows "obvious erroneous trade" roll-back mechanisms, etc.

Very few people want the financial system to be a contractual suicide pact - they want it to be predictable, but when the unpredictable happens - they want the retail and institutional investor to be protected (the HFT players can go beat each other up - no one will really cry about them). And unpredictable can be anything from a power event taking out multiple exchanges in the NJ triangle (Sandy hurricane) to a cyber-attack (never happened yet) to a flash-crash driven by algorithms from multiple HFT driving each other nuts (happened at least once).

So, it is not EOD processes as such, but the ability to pause, assess the entire system holistically, and then correct it before it blows up the portfolios of everyone holding a 401k. So even though the exchanges _could_ got to 24/7 trading, I'd be surprised if we just went away from cyclical 24-hr based windows of settlement.

[skippyboxedhero]

Right, but EOD also introduces credit risk on the clearing house/bilateral.

Also, I would say that probabilistic finality is one of the main issues that tradfi has with crypto (which also exists in the case of margined exchanges, for the reasons you mention). Market participants expect trades to be final, the idea that they can be rolled back is extremely unattractive.

The reason you don't need to stop the market in crypto is because you don't have EOD reconcliation. If everything settles immediately and the risk engine can keep up with the market then there is no credit risk (there have also been multiple solutions to this problem in crypto, none of them involved waiting until the end of the day to see what happens when they try to cross everyone). The reason they have market halts is to limit credit risk from the market moving in one direction and winners being unable to recover gains from the losers. It is fair to say crypto DEX haven't solved this with ADLs but they start from a better place and the higher level of competition means that innovation to invent new solutions is actually happening. The reason exchanges have shit tech is because there is no competition.

I feel like your comment is baiting because you surely know what happened at LME with trades getting cancelled because they would have caused LME insiders to lose money. Hunt Brothers caused massive issues for clearing house, HK government had to bail out clearing house...there are massive issues with the current system.

[foobar10000]

I kindof agree that it is unattractive - but the regulators are perfectly happy with "EOD also introduces credit risk on the clearing house/bilateral." if it allows them to protect retail and institutional investors. They'd rather bail out the clearing houses - which they can do - then have the retail investor lose faith in the markets for a generation or 2 - ala the great crash.

So, to your point - yep, it is not final. But it is unattractive _to the market making and prime brokers and similar players_ which the regulators do not care much about.

[woah]

> they want the retail and institutional investor to be protected

That costs money, indirectly

[foobar10000]

But it does allow these investors to participate in the markets without losing their shirts - and the lack of such liquidity would impact the market more so than the cost of the risk mitigation - which as you completely correctly noted is not free - both in first and second order terms.

[infecto]

Hyperliquid while big in crypto is still small compared to mainstream financial markets.

I don’t think you have made a case for anything yet.

[skippyboxedhero]

So when the iphone came out and no-one was using it, it wasn't useful? I cannot conceive a reality where I perceived the current state of things as the only things that could ever exist. I do not believe anyone could have that amount of self-regard, it is impossible.

HL has been tested up to $8bn/day in volume. The gap in resources is several orders of magnitude so if big exchanges were doing 1000x more volume it wouldn't matter because HL is literally running with a handful of engineers vs thousands. In reality, HL is doing 25-40% of CME, for example.

[infecto]

No idea what you’re trying to prove. You have said a lot of negative things and your examples is hyperliquid which is processing small volume.

[itsthecourier]

so let me get this straight Skippy, you're saying you got better performance and reliability than the LMAX disruptor with Multicast that runs inside many big exchanges?

I have a really hard time believing something decentralized will surpass the the physical limitations of speed of light and low level assembler from C++ optimizations without any GC

also the fact that hyperliquid sequencing of orders is opaque and not opensource, and there is indeed latency in the consensus, I cannot believe yet there are p99 stability in completed transactions

[skippyboxedhero]

why do you think LMAX disruptor runs inside many big exchanges? have you read some blogs online? LMAX disruptor does not run at "many big exchanges".

Disruptor is written in Java. LMAX itself is a tiny exchange that largely deals with institutions so doesn't have the same message volume as retail facing.

What language do you think validators run? So much stuff that makes absolutely no sense..

Order sequencing is not opaque, that is one of the primary benefits of DEX that aren't decentralized. SOL has issues with sequencing but there are attempts to fix this (Jane Street is one of the places working on this). This is a point that I made above about block space, and isn't relevant for Hyperliquid.

[cgio]

The first 90% of features takes 10% of the time to deliver. You are comparing capital infrastructure markets with deep regulatory obligations and multiple stateful interfaces (OUCh/FIX) to retail focused matching engines with a very slim stateless protocol surface (REST).

[amluto]

An amusing, moderately expensive solution that might actually work would be to have a weekday system and a weekend system. Think of it as a spare D/R system that you intentionally swap twice a week :)

If done right, it would be a complete separate system. Separate IP addresses and all.

[nippoo]

That's effectively time-based request sharding which seems sensible but you'd still have to reconcile trades and any open positions (etc) across the time boundary where one system stops accepting requests and the other one starts. And keep the databases synchronous (ie have some system to make sure they're in sync at the changeover time) - or have a few minutes/hours of downtime between weekends and weekdays while you copy the whole production database from one system to another. The devil is in the details!

[amluto]

For what it’s worth, in some financial markets, there is a sort of natural daily cutover time [0] across which you are often not trading quite the same instrument. For example, the settlement date may roll over, etc. And a lot of Very Serious Finance is already built on the idea that most parties do not instantaneously reconcile anything and don’t depend on real-time trade lists.

I really can imagine a system in which the Monday trading system runs all day and then turns off at a predetermined time. Then it has 15 minutes to produce and disseminate a final list of all transactions, after which it becomes completely unavailable and is ready for maintenance. Any subsequent amendment to Monday’s trading would be done out of band. Open orders at the end of Monday do not carry over immediately to Tuesday, although front ends are welcome to recreate them. Everyone would understand that liquidity would be thin for the first few seconds after the system rolls over.

For added fun, Monday and Tuesday could actually be allowed to overlap in a hypothetical trading system, although the market participants might not love this.

[0] which is not the same for all instruments, and holidays mean that not every instrument rolls over meaningfully every day.

[justinclift]

Heh, maybe they'll develop a sudden interest in the old Vax VMS clustering approach? ;)

[gigatexal]

I hated my time as an SRE. But … can’t it be done with some combination of canaries and blue green deployments and extensive testing? Where when things look good you just swap all the traffic to the good stuff keeping the rollback hot etc etc?

[jedberg]

That's how we got 99.99% at Netflix. And it cost a lot of money. But a canary implies that something may go wrong and you have to roll back. The canary is still production traffic, so some transactions would fail, which isn't allowed for this kind of workload.

I image you'd have to use shadow execution, where you roll out a full second copy, run every transaction through both, and compare the results. And then, only after a certain time, switch traffic to the new infra and tear down the old.

But you would need a ton of extra hardware (more than double) and a lot of ways to keep data in sync. And of course if you put an LLM or other non-deterministic system in there, that's a whole other can of worms.

Like I said, a fun problem to solve. :)

[gigatexal]

Folks that keep the lights on 24/7 aka SREs are super heroes that wear capes. Thank you for your service.

I couldn’t do it. I like infra and all but it’s just not my cup of tea. Def true that in a trading pov the trade must be executed. It must settle. It must work. Or capital flight will be huge.

[cgio]

There are different kinds of updates that influence options and feasibility. Keeping in mind that deep in the heart of an exchange is a single threaded process, the sequencer. Therefore, you have three layers, external facing protocols, sequencer/matching engines, and internal interfaces. Internal interfaces are the easiest for b/g. External protocols, any change worth its weight changes the protocol and therefore requires participants to change their codebases too. Versioning protocols is an option, but still the integration with consumers is much more transparent and usually you have them test on pre-prod environments, occasionally also requiring attestation and conformance testing (regulated markets). Sequencer and matching engine are at the core. You could do parallel runs but not b/g. Theoretically you could abstract the matching engine and keep a barebones sequencer immutable, but this will have performance implications. So yes, you can do things, but not in a completely transparent way, unless if you introduce an “upgrade jitter” to give you a window for transparent upgrades. It’s an interesting domain, I think people will just accept occasional downtimes as a better option than constant jitter cost.