WazirX: Doge Frenzy Sends India’s Largest Crypto Exchange To The ‘Doge’House
A sudden surge in trading volumes in meme cryptocurrency Dogecoin has left India’s largest cryptocurrency exchange struggling, with users taking to social media to complain about transaction and payment delays.
WazirX, which claims to have the largest trading volumes of any crypto exchange in India, in turn has blamed the exponential increase in interest in cryptocurrencies, most recently, in Dogecoin.
Dogecoin has risen from $0.002 cents a year ago to a record high of $0.65 on May 5. Its market value has shot up over 270 times to $85 billion, according to data from crypto data aggregator Coinmarketcap.com. The surge, some say, has come ahead of Elon Musk’s Saturday Night Live appearance. Musk has frequently tweeted about Dogecoin, sending interest in the meme crypto soaring. Between May 3 and May 5, Doge’s trading volumes have more than tripled to over $42 billion globally, the website says.
This, according to WazirX Founder and Chief Executive Officer Nischal Shetty, caused its systems and mobile application to crash as the sudden surge in volumes was wrongly perceived as a threat.
“We’re seeing a new all-time-high everyday in terms of trading volumes, active users, and traffic on WazirX. On May 4, one of our systems—on detecting high traffic—wrongly marked it as bad traffic and started blocking the requests,” he said. “It was good traffic, and this error caused our users to have intermittent access to the app.”
WazirX’s users, however, weren’t in a forgiving mood and took to social media to complain. With memes, of course.
Doge Jokes Apart...
Doge memes apart, WazirX has found it challenging to keep up with the growing interest in crypto trading in India.
New users, active traders and trading volumes on the exchange, Shetty said, have grown over 300% since January. “The Dogecoin price surge was so massive that it caused an almost decade-old company like Robinhood to go down,” he said. “WazirX is a three-year old company, and apart from us, no other crypto exchange in India has ever seen this kind of traffic.”
But this isn’t the first time the exchange has faced an issue due to volume surge.
These issues are not new and have only increased since January, said a user who spoke on condition of anonymity. Crypto user chat groups on Telegram and Reddit.com, the person said, have seen constant chatter on how the WazirX website starts acting up when faced with high trading volumes, has security issues with OTP authentication, and a persistent lack of customer support.
On April 4, Binance-owned WazirX faced an outage when trading volumes on the exchange crossed $270 million. It took more than a day for the company to fix those issues.
When another outage hit in early May and users complained about deposits getting stuck, Shetty said a scheduled downtime was to blame.
“When we were under a downtime yesterday (May 4, 2021), we weren’t able to get notified about the rupee deposits from our payment partner. This caused the rupee deposit to get stuck for anyone who tried depositing it on WazirX during that period,” Shetty said. “However, we have fixed this, and all the stuck deposits have been credited to our users’ wallets.”
The problem with delays in withdrawals and deposits, according to a founder of another cryptocurrency exchange who spoke on the condition of anonymity, is also due to suspension of its current account with ICICI Bank Ltd., which the exchange relied on heavily.
As payment processors and banks in the country steer away from cryptocurrency exchanges citing regulatory uncertainty, the glitches in withdrawal and deposits from crypto wallets have increased, the person said.
More Than They Can Chew...
The problem for WazirX may go beyond one-offs though.
“Clearly, the recent system outages are instances of WazirX biting off more than it can chew,” said Vishal Gupta, co-founder of Bitcoin Alliance India, a non-profit organisation that educates people on cryptocurrency.
“The exchange has seen a tremendous rise in its trading volumes as many new-to-crypto users have begun using the exchange after the Bitcoin rally. But their infrastructure is obviously not being able to meet this demand spike,” he said. “While this goes on to show that more crypto users are trading on the exchange, WazirX needs to expand and upgrade its systems at a much higher pace to address server failures.”
The complaints are also higher for WazirX as its crypto user base is the largest in India, said Gupta.
Agreed, Gautam Chhugani, director for financials and fintech at Bernstein Research. “It’s just unprecedented demand. The exchange has been facing server capacity issues and some delays in deposits, but those could only be addressed over time as its systems upgrade.”
Shetty of WazirX accepts they have problems to solve.
“We’re learning, adding checks in place, and scaling our systems to handle more traffic and be better prepared for the future,” he said.
But for now, Dogecoin is giving WazirX a “ruff” time!