May 5, 2019
 min read

How WazirX P2P Exchange works & how it saved Indian traders from Crypto Ban.

( How to Build Bitcoin P2P Exchange and how it works )
The RBI had just decided to turn their heads on traders during the boom of crypto trading in India; done by enforcing a ban on banks, barring everyone from trading in cryptocurrencies with INR.

Traders were hit hard, the market dipped in fear. We had to find a way to overcome this unprecedented blow to our traders, and this is how we did it!

We built the first auto order matching P2P system in the world, integrated into WazirX. More on what we have achieved & how we built this.

Our Progress so far

  • Record-breaking for any P2P — Average trade time is just~17 mins.
    (Order placed → Bank Transfer → Confirmation)
  • We achieved 166cr INR (24 million USDT) in trading so far.
  • Auto order matching with the open order book, first in the world
  • Highest liquidity.
  • Oh and we built & launched this in 16 days
An exchange like interface, with auto order matching P2P exchange.

Our Goals with P2P

When we started planning for P2P we laid down some important goals. This kept us razer focused on the problem we were solving. Below I will list these goals and a brief of how we achieved them.

  • Solving high liquidity
  • Instant and Simple
  • Safe

Crypto Economics: Solving liquidity

The tricky bit. We had some hard decisions to make.

The INR liquidity problem

After the banking ban, there was no way to increase INR reserves which meant the overall liquidity of the market will have a cap. We wanted unlimited liquidity as a cap is bad for a marketplace.

A market’s volume is also directly proportionate to the liquidity of the currency, buying power. A growing market needs a growing chart of quote currency that is INR.

An example, if the total INR reserves in WazirX is 1Cr INR then the maximum liquidity if everyone is active is 1Cr INR. Considering human behavior, not everyone will be active thereby further reducing the circulating supply.

Evaluating INR / INR for P2P

We had to make a decision whether to keep INR as a quote or introduce USDT market to keep growing our liquidity. The only way to keep INR quote is to increase our INR reserves or swap INR using INR / INR P2P.

A major challenge about INR / INR P2P liquidity is the exchange heavily dependents on INR holders who are active. And this number goes down in the bear market, hence there’s a bottleneck.

The other way to increase INR liquidity is by extrapolating INR reserves, if done ethically, this can be done by incentivizing peers to hold INR in their bank reserves on exchange’s behalf, with this an Exchange which has 1Cr INR can extrapolate to say 3Cr INR or more.

However, this whole process lacks transparency and the exchange is risking its solvency. Some exchange might claim to safeguard its solvency by taking crypto as collateral, during crisis converting collateral Crypto → INR is another problem, they will have to use local-bitcoins or other ways to convert to INR, all this is subjected to external liquidity.

This is too risky for an exchange and its users.

Why USDT / INR works

Considering many such risky and ethical aspects we introduced USDT/INR and not INR/INR for P2P. Here the USDT liquidity is not capped, plus peers are in full control of their fiat-INR, decentralizing fiat. The exchange is not depended on peers to keep the solvency.

All this ultimately helped us take no risk as an exchange, less dependency on dormant traders and no cap on liquidity. We chose a stable coin USDT over BTC/INR since volatility won’t discourage trades.

Auto-matching vs Listing? Simplicity

When I was considering P2P, I wasn’t really happy with what was out there. The most popular model was like a classified listing, decisions like price, volume, reputation, last active, etc were to be considered before making the trade. This created friction.

We wanted a simpler process, closer to existing trading behavior, eliminating the tricky stuff.

The best businesses eat their customer’s complexity.

So we build this P2P market place like an exchange with auto-matching orders, this was the world’s first, it was quite a challenge.

What we built was sexy and an instant hit. As a trader, you don’t have to worry about reputations or volume split per trader. The system does that for you and simply presents you with a list of folks to make payments to.

The demand and supply are automatically sorted by price so we don’t control the market premiums/discounts, it regulates itself, no tips, no bonus, no fuel, no new fancy terms, just basic trading.

Over time we learned a lot of things and incorporated algorithms to make sure trading is instant and simple.

Trade in USDT or INR in India?

Most of us have tracked Bitcoin in INR than in USD. While we picked USDT as the logical market to grow post ban, we knew it would be very difficult to get Indian traders to get used to USDT market over INR.

Some speculated crypto-crypto is not for India, but there is always a first time for everything.

We then built “ Trade in USDT & BTC markets with INR ”. It was some engineering and product marvel, our traders loved it, we eased folks into trading in USDT and BTC markets while maintaining the comfort zone of INR.

All the USDT and BTC value are converted to equivalent INR in real time, we made it easy. The buy/sell form also had a mode where you can enter INR price which will later be equated to USDT or BTC.

This is the XRP/BTC market, prices are now presented in INR in real-time. It is just like trading in INR

Security, Safety

When we started this project all I could think of is stories of various scams on localbitcoin.com and few other sites. Safe and secure transactions were one of the most important goals, there are various algorithms and gamified economic models to keep things safe.

Features like collateral for buyers has brought in more trust in the system, we make sure at any point of transaction your funds are safe.


We introduced distinct patterns and changed the game for P2P trading. In the process, we learned quite a bit and had a lot of fun doing it. Today in India it is possible to buy and sell large volumes of BTC in a few hours, some say it is better than non-ban days.

Note WazirX P2P is also a decentralized fiat exchange with auto order matching, traders have full control of their fiat funds. Binance P2P.

If you have any questions or feedback feel free to tweet out to me. My DMs are open. We are working hard to make P2P better every day for you. Cheers!


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