How Pocket can change the way Exchanges interact with overarching networks

Jul 1, 2020

Here at Arcadia, it’s no secret that we’re big fans of Pocket Network and the movement of simplified network communications. Arcadia is also big on the ways security in our industry can adapt and grow to prevent loss of user assets and value.

One of the intersections of such these two loves of ours is in the arena of exchange security through Pocket. In the progression of our business operations over the years, Arcadia has had the pleasure of working alongside our clients during the listing process. We’ve also had the pleasure of developing a small number of cryptocurrency exchanges for clients as well. In that time we’ve come across a few constant problems across the vast majority of exchanges in the industry. These constants are the following,

  • Exchanges often maintain 1–3 full nodes for communicating with the blockchains they are providing trading pairs for

  • Node upgrade timeframes and coordination are often centralized, and time-consuming (and sometimes costly)

  • The low number of nodes communicating with the network on behalf of the exchange leads to higher susceptibility to forks, DDOS attacks (directly focused on exchange nodes), and other targeted attacks that can and have led to a loss of funds.

Pocket’s network of decentralized node operators alleviates if not solves the above problems on multiple levels. Pocket by the nature of it’s offering solves the problem of a limited number of operating nodes on listed coins without causing bloat in the overarching server and related development operation costs.

Thanks to the slashing and jailing functionality present within the Pocket Ecosystem, there is a reasonable degree of trust on the communications network to have the updated node versions, and longest chain whenever possible. Thus preventing exchanges from entering onto short-range difficulty-related forks, and hard fork-related chain forks. This paired with the ability to communicate with multiple nodes with a couple of API calls and the ability to easily wrap the Pocket Client in a way that is JSON-RPC compatible, Pocket comes out as a great solution for targeting the problems raised earlier in the article.

Pocket’s ability to lower the attack surface for DDOS attacks and increasing the cost for DDOS-attacks, in general, allows for uptime and network communications to remain stable and constant while preventing massive spikes in upkeep costs and DDOS-protection.

These reasons alongside others, including some benefits in the arena of hot wallet management and transaction announcement (which we’ll be covering in a future article), is why we will be implementing Pocket as a core element within our exchange development stack.