Expense Sharing — System Design Academy

Complete System Design Tutorial

The design separates the latency-sensitive online path, the correctness-critical durable transition, and asynchronous projection or repair work. Each chapter below explains one decision shown in the diagrams.

1. Requirements and scope

Functional requirements

Execute the primary expense sharing workflow and return an observable result.
Expose the concrete operations shown below with stable retry identities.
Allow operators to inspect, disable, repair, or replay ambiguous state.
Keep derived analytics and notifications off the correctness-critical path.

Non-functional requirements

Design for 10M users · groups up to 1K · auditable revisions.
Protect the named business invariant under concurrency and partial failure.
Scale by an explicit aggregate/partition key without one global mutex.
Degrade intentionally when cache, queue, store, or regional ownership is unavailable.

Primary invariant: every object transition is legal and atomic at one aggregate boundary.

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2. Capacity assumptions

State assumptions before choosing technology. The supplied workload is 10M users · groups up to 1K · auditable revisions. Convert it into peak throughput, retained records, bandwidth, and failure budget; then connect each number to a component.

Dimension	Working estimate	Design implication
Traffic	10M users · groups up to 1K · auditable revisions	Separate online compute, durable state, and asynchronous consumers.
Peak factor	5–10× average	Admission control, autoscaling headroom, and hot-key protection.
Stored state	write rate × retention × record bytes	Partition count, indexes, compaction, backup, and archival tier.
Network	peak operations × payload size	Batching, compression, edge placement, and egress budget.
Availability	99.9–99.99%	Multi-zone replicas, tested failover, and dependency error budgets.
Recovery	RPO/RTO by invariant	Ack boundary, replay retention, reconciliation, and operator runbooks.

Do not cargo-cult the numbers: show the arithmetic, name the uncertain variable, and say which production metric will replace the interview estimate.

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3. API and data model

POST /v1/groups/{id}/expenses

PATCH /v1/expenses/{id} If-Match

POST /v1/groups/{id}/settlements

GET /v1/groups/{id}/balances

Authoritative records and indexes

expense(id PK, group_id, payer, amount, currency, version)

share(expense_id, member_id, owed_amount)

settlement(id, from_member, to_member, amount, state)

balance(group_id, from_member, to_member, amount, checkpoint)

Command and event envelopes

# Command envelope
operation: POST /v1/groups/{id}/expenses
request_id: req_01J...
idempotency_key: idem_7f2...
aggregate_key: expense-sharing_123
expected_version: 17
payload: {...}

# Durable event
event_id: evt_01J...
aggregate_key: expense-sharing_123
event_type: expense_sharing_committed
schema_version: 3
trace_id: tr_8ac...

The authoritative aggregate and idempotency record share a transactional or conditional-write boundary. Event streams, search indexes, caches, analytics, and dashboards are rebuildable projections.

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4. Why this architecture and what it costs

The boxes are not a shopping list. Each boundary exists because it owns a different invariant, scaling dimension, data lifecycle, security policy, or failure domain. The table makes those choices explicit and shows when the design should remain simpler.

Component	Owned responsibility	Why separate it	Rejected alternative	Cost and evolution trigger
Mobile Client	Owns client protocol, request identity, retry, and resume behavior. In this design it participates in: Validate membership, currency precision, and split strategy totals.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents the external caller from also owning the contract and failure behavior of Expense API.	Keep this behavior inside an adjacent service. Prefer that simpler option until independent scale, ownership, policy, or failure isolation is measurable. Here that simpler choice would couple “Percentage split does not sum exactly” to the external caller.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Mobile Client boundary before extracting or scaling it.
Expense API	Owns authentication, validation, quotas, deadlines, and routing. In this design it participates in: Append immutable expense revision and participant shares; reverse prior revision on edit.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Mobile Client from also owning the contract and failure behavior of Group Aggregate.	Put protocol, authentication, quotas, and business transitions in one process. Acceptable at low scale, but it couples external traffic risk to domain releases. Here that simpler choice would couple “Expense edit races settlement” to Mobile Client.	Costs another hop, policy distribution, and a high-blast-radius fleet. Introduce it when many clients or services need one protocol and protection boundary. Measure the latency, saturation, lag, or mismatch at the Expense API boundary before extracting or scaling it.
Group Aggregate	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Consume journal to update pairwise debt projection under checkpoint.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Expense API from also owning the contract and failure behavior of Membership Policy.	Keep this behavior inside an adjacent service. Prefer that simpler option until independent scale, ownership, policy, or failure isolation is measurable. Here that simpler choice would couple “Member leaves with outstanding debt” to Expense API.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Group Aggregate boundary before extracting or scaling it.
Membership Policy	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Optionally simplify net debt while retaining original obligations and audit.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Group Aggregate from also owning the contract and failure behavior of Split Strategy.	Embed policy in every caller. Rules then drift by deployment version and emergency changes require fleet-wide redeployment. Here that simpler choice would couple “Currency conversion rate changes” to Group Aggregate.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Membership Policy boundary before extracting or scaling it.
Split Strategy	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Record settlements idempotently and update balances/notifications asynchronously.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Membership Policy from also owning the contract and failure behavior of Currency / Rounding.	Keep this behavior inside an adjacent service. Prefer that simpler option until independent scale, ownership, policy, or failure isolation is measurable. Here that simpler choice would couple “Simplification changes legal counterparty” to Membership Policy.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Split Strategy boundary before extracting or scaling it.
Currency / Rounding	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Validate membership, currency precision, and split strategy totals.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Split Strategy from also owning the contract and failure behavior of Expense Journal.	Keep this behavior inside an adjacent service. Prefer that simpler option until independent scale, ownership, policy, or failure isolation is measurable. Here that simpler choice would couple “Percentage split does not sum exactly” to Split Strategy.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Currency / Rounding boundary before extracting or scaling it.
Expense Journal	Preserves durable ordering, replay, and consumer checkpoints. In this design it participates in: Append immutable expense revision and participant shares; reverse prior revision on edit.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Currency / Rounding from also owning the contract and failure behavior of Share Store.	Call every downstream consumer synchronously. That couples user latency and availability to analytics, notification, indexing, and audit dependencies. Here that simpler choice would couple “Expense edit races settlement” to Currency / Rounding.	Costs eventual consistency, schema evolution, replay tooling, idempotent consumers, and lag operations. Earn it when bursts or downstream failure must not block acknowledgment. Measure the latency, saturation, lag, or mismatch at the Expense Journal boundary before extracting or scaling it.
Share Store	Owns authoritative versioned state or immutable evidence. In this design it participates in: Consume journal to update pairwise debt projection under checkpoint.	Defines the source of truth and commit boundary. It prevents Expense Journal from also owning the contract and failure behavior of Debt Projection.	Let each service persist its own interpretation. That removes one clear commit boundary and makes retries, support, and reconciliation ambiguous. Here that simpler choice would couple “Member leaves with outstanding debt” to Expense Journal.	Costs schema migration, replication, backup, and shard ownership. Split storage only when access patterns, retention, or compliance boundaries materially differ. Measure the latency, saturation, lag, or mismatch at the Share Store boundary before extracting or scaling it.
Debt Projection	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Optionally simplify net debt while retaining original obligations and audit.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Share Store from also owning the contract and failure behavior of Simplification Engine.	Read authoritative storage for every request. Simpler initially, but latency and source-of-truth load scale together and a hot key becomes a database incident. Here that simpler choice would couple “Currency conversion rate changes” to Share Store.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Debt Projection boundary before extracting or scaling it.
Simplification Engine	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Record settlements idempotently and update balances/notifications asynchronously.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Debt Projection from also owning the contract and failure behavior of Settlement Service.	Keep this behavior inside an adjacent service. Prefer that simpler option until independent scale, ownership, policy, or failure isolation is measurable. Here that simpler choice would couple “Simplification changes legal counterparty” to Debt Projection.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Simplification Engine boundary before extracting or scaling it.
Settlement Service	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Validate membership, currency precision, and split strategy totals.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Simplification Engine from also owning the contract and failure behavior of Payment Link Adapter.	Keep this behavior inside an adjacent service. Prefer that simpler option until independent scale, ownership, policy, or failure isolation is measurable. Here that simpler choice would couple “Percentage split does not sum exactly” to Simplification Engine.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Settlement Service boundary before extracting or scaling it.
Payment Link Adapter	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Append immutable expense revision and participant shares; reverse prior revision on edit.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Settlement Service from also owning the contract and failure behavior of Activity Feed.	Keep this behavior inside an adjacent service. Prefer that simpler option until independent scale, ownership, policy, or failure isolation is measurable. Here that simpler choice would couple “Expense edit races settlement” to Settlement Service.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Payment Link Adapter boundary before extracting or scaling it.
Activity Feed	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Consume journal to update pairwise debt projection under checkpoint.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Payment Link Adapter from also owning the contract and failure behavior of Notification Router.	Keep this behavior inside an adjacent service. Prefer that simpler option until independent scale, ownership, policy, or failure isolation is measurable. Here that simpler choice would couple “Member leaves with outstanding debt” to Payment Link Adapter.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Activity Feed boundary before extracting or scaling it.
Notification Router	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Optionally simplify net debt while retaining original obligations and audit.	Separates a distinct scale, ownership, policy, or failure boundary. It prevents Activity Feed from also owning the contract and failure behavior of Audit / Export.	Keep this behavior inside an adjacent service. Prefer that simpler option until independent scale, ownership, policy, or failure isolation is measurable. Here that simpler choice would couple “Currency conversion rate changes” to Activity Feed.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Notification Router boundary before extracting or scaling it.
Audit / Export	Owns one bounded domain decision, transition, or operational capability. In this design it participates in: Record settlements idempotently and update balances/notifications asynchronously.	Proves correctness and supports controlled recovery. It prevents Notification Router from also owning the contract and failure behavior of operators and repair tooling.	Infer correctness from request logs. Logs do not prove durable business state, detect silent drift, or safely repair ambiguous outcomes. Here that simpler choice would couple “Simplification changes legal counterparty” to Notification Router.	Costs an interface, deployment, telemetry, ownership, and failure mode. Keep it in-process first; extract when independent scale or reliability pays for the boundary. Measure the latency, saturation, lag, or mismatch at the Audit / Export boundary before extracting or scaling it.

Decision 01

Chosen boundary vs simpler monolith

Store immutable expenses and participant shares; current pairwise balances are derived so edits and deletions can reverse prior effects cleanly.

A single deployable with one transactional store is the right starting point for a small expense sharing workload. The proposed boundary becomes justified when store immutable expenses and participant shares; current pairwise balances are derived so edits and deletions can reverse prior effects cleanly. Separating it contains the named failure “Percentage split does not sum exactly” without placing unrelated work on the critical path.

Decision 02

Correctness vs availability

Strategy interfaces support equal, exact, percentage, and share splits while one validator enforces totals and currency precision.

The design coordinates only where every object transition is legal and atomic at one aggregate boundary. Everywhere else it accepts bounded staleness or asynchronous propagation. The alternative—strong coordination for every projection—simplifies the mental model but increases tail latency and turns partitions into broad write unavailability.

Decision 03

Operational cost and evolution

Debt simplification is an optional projection: minimizing transfers changes who owes whom and must never replace the original obligations.

This choice adds dashboards, ownership, schema compatibility, capacity planning, and recovery runbooks. Start with the minimum topology that supports “Consume journal to update pairwise debt projection under checkpoint.” and extract another service only when measured throughput, blast radius, data lifecycle, or team ownership changes independently.

Why this design: the synchronous path contains only the decisions required to protect every object transition is legal and atomic at one aggregate boundary. Durable projections, notifications, indexing, analytics, and repair are isolated so their load or failure cannot corrupt the acknowledged operation.

Correctness boundary

Store immutable expenses and participant shares; current pairwise balances are derived so edits and deletions can reverse prior effects cleanly.

Scale boundary

Strategy interfaces support equal, exact, percentage, and share splits while one validator enforces totals and currency precision.

Operational boundary

Debt simplification is an optional projection: minimizing transfers changes who owes whom and must never replace the original obligations.

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5. Critical flow and algorithm

Validate membership, currency precision, and split strategy totals.

Append immutable expense revision and participant shares; reverse prior revision on edit.

Consume journal to update pairwise debt projection under checkpoint.

Optionally simplify net debt while retaining original obligations and audit.

Record settlements idempotently and update balances/notifications asynchronously.

Retry-safe mutation skeleton

identity = authenticate(request)
prior = idempotency.get(identity, request.key)
if prior: return prior.result

current = authoritative_store.read(partition_key)
next_state, events = domain.transition(current, request)
authoritative_store.compare_and_set(current.version, next_state)
idempotency.commit(request.key, next_state.result)
outbox.append(events)
return next_state.result

Exactly-once business effect: the network can duplicate requests. Stable identities, conditional state transitions, immutable event IDs, and reconciliation make the user-visible effect happen once.

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6. Caching, hot keys, and backpressure

Cache policy

Add a cache only for a measured repeated read; do not place mutable correctness state in a disposable layer.

Hot partition or tenant

Measure per-key and per-tenant skew. Replicate safe reads, isolate the offender, salt only when ordering permits, and enforce budgets.

Backpressure

Bound queues, buffers, connection pools, and concurrency. Shed low-priority work and scale from lag/oldest-item age rather than CPU alone.

Stampede and retry storms

Use single-flight/coalescing, jittered expiry, bounded retries, exponential backoff, and circuit breakers so one dependency failure does not multiply traffic.

Cache outage rule: never allow every miss to fall through simultaneously. Use local protection, request coalescing, circuit breakers, bounded pools, and controlled fallback.

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7. Partitioning and consistency

partition = stable_hash(primary_or_aggregate_key) → shard owner
write = conditional_update(expected_version)
read_projection = versioned and rebuildable

Strong boundary

every object transition is legal and atomic at one aggregate boundary. Use a uniqueness constraint, serializable/conditional write, expected version, or fencing token at this boundary.

Eventual boundary

Analytics, notifications, search, read models, and operational dashboards may lag when freshness is observable and replay exists.

Operation	Consistency	Reason
Authoritative mutation	Conditional / serializable	Protect uniqueness, ownership, money, inventory, order, or legal state transition.
Read after own write	Primary, session token, or cache warm	The caller must observe the result it just committed.
Ordinary read projection	Bounded stale where safe	Replicas and caches improve latency when version/freshness is visible.
Analytics and operations	Eventual + replay	Freshness is less important than isolating the online path.

Route every mutation for one aggregate to one owner/partition epoch.
Use cursors rather than offsets for changing ordered collections.
Retain tombstones until replication and repair windows close.
Move shard ownership through versioned maps and dual-read verification.

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8. Failure drills and recovery

Failure	Runtime behavior	Recovery proof
Percentage split does not sum exactly	Stop unsafe progress, serve only explicitly safe degraded behavior, and recover from durable state.	Reconciliation returns zero invariant gaps; lag/replica health and user-visible SLO return to baseline.
Expense edit races settlement	Resolve at source of truth with uniqueness, expected version, lease generation, or monotonic cursor.	Reconciliation returns zero invariant gaps; lag/replica health and user-visible SLO return to baseline.
Member leaves with outstanding debt	Stop unsafe progress, serve only explicitly safe degraded behavior, and recover from durable state.	Reconciliation returns zero invariant gaps; lag/replica health and user-visible SLO return to baseline.
Currency conversion rate changes	Stop unsafe progress, serve only explicitly safe degraded behavior, and recover from durable state.	Reconciliation returns zero invariant gaps; lag/replica health and user-visible SLO return to baseline.
Simplification changes legal counterparty	Stop unsafe progress, serve only explicitly safe degraded behavior, and recover from durable state.	Reconciliation returns zero invariant gaps; lag/replica health and user-visible SLO return to baseline.

Recovery checkpoint

# Recovery checkpoint
scenario: Percentage split does not sum exactly
operation_id: op_01J...
aggregate_key: expense-sharing_123
last_durable_version: 18
projection_checkpoint: partition-07@offset-482901
retry_policy: same_identity / bounded_backoff
reconciliation_status: pending
owner: Audit / Export

Every dependency needs a timeout, retry budget, circuit policy, and explicit fail-open, fail-closed, stale, or read-only mode. “Highly available” is incomplete until degraded behavior is named.

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9. Security, regions, and observability

Security and abuse

Authenticate at ingress and authorize the exact resource/tenant on every operation.
Encrypt transport and durable data; tokenize or isolate sensitive material.
Rate-limit by tenant, actor, resource, and network; detect enumeration and anomalous fan-out.
Redact secrets and personal data before logs or analytical storage.
Audit privileged mutations, support access, policy changes, and forced recovery.

Signals that prove correctness

User-visible success rate and p50/p95/p99 latency.
Timeouts, circuit state, saturation, and replica health by dependency.
Queue lag, oldest-item age, retries, and dead-letter growth.
Conflict, duplicate-suppression, and reconciliation mismatch counts.
Business drill: Percentage split does not sum exactly — alert before the user-visible invariant is violated.

Regional evolution

Begin multi-zone with tested failover, backups, and reconciliation.
Add global stateless ingress and regional read projections.
Keep one write owner per aggregate or partition where coordination is expensive.
Move ownership with epochs/fencing; avoid silent simultaneous writers.
Use expand/contract schemas, canaries, shadow reads, and reversible cutovers.

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10. Interviewer follow-ups

How do percentage splits validate?

Store immutable expenses and participant shares; current pairwise balances are derived so edits and deletions can reverse prior effects cleanly. Walk the concrete lifecycle step “Validate membership, currency precision, and split strategy totals.” Then test it against “Percentage split does not sum exactly”. State the retry identity, durable checkpoint, recovery signal, and cost of the alternative.

How are expenses edited?

Strategy interfaces support equal, exact, percentage, and share splits while one validator enforces totals and currency precision. Walk the concrete lifecycle step “Append immutable expense revision and participant shares; reverse prior revision on edit.” Then test it against “Expense edit races settlement”. State the retry identity, durable checkpoint, recovery signal, and cost of the alternative.

How does debt simplification work?

Debt simplification is an optional projection: minimizing transfers changes who owes whom and must never replace the original obligations. Walk the concrete lifecycle step “Consume journal to update pairwise debt projection under checkpoint.” Then test it against “Member leaves with outstanding debt”. State the retry identity, durable checkpoint, recovery signal, and cost of the alternative.

How do currencies differ?

Store immutable expenses and participant shares; current pairwise balances are derived so edits and deletions can reverse prior effects cleanly. Walk the concrete lifecycle step “Optionally simplify net debt while retaining original obligations and audit.” Then test it against “Currency conversion rate changes”. State the retry identity, durable checkpoint, recovery signal, and cost of the alternative.

How do concurrent group edits resolve?

Strategy interfaces support equal, exact, percentage, and share splits while one validator enforces totals and currency precision. Walk the concrete lifecycle step “Record settlements idempotently and update balances/notifications asynchronously.” Then test it against “Simplification changes legal counterparty”. State the retry identity, durable checkpoint, recovery signal, and cost of the alternative.

Answer pattern: state the invariant, choose a mechanism, walk one failure, name the recovery signal, and explain the cost of the alternative.

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11. How to present this in 45 minutes

Time	What to cover
0–5 min	Clarify scope, workload, SLOs, and the correctness invariant.
5–10 min	Estimate throughput/storage and define concrete APIs and records.
10–20 min	Draw online, durable-write, and asynchronous/repair paths.
20–30 min	Explain the exact lifecycle, partition key, and concurrency control.
30–38 min	Discuss caching, hot keys, replication, and backpressure.
38–43 min	Run failure drills, security, observability, and regional evolution.
43–45 min	Summarize the five most important choices and trade-offs.

Final decision summary

Invariant	every object transition is legal and atomic at one aggregate boundary.
Partitioning	Stable aggregate/key hash with versioned ownership and measured hot-key isolation.
Commit	Expected version or uniqueness at the authoritative state boundary.
Async work	Durable outbox/log, idempotent consumers, checkpoints, and replay.
Recovery	Same operation identity, durable truth lookup, and business reconciliation.

Closing summary

CLOSING “The design protects every object transition is legal and atomic at one aggregate boundary. The online path stays bounded, authoritative state is versioned and partitioned, and asynchronous work is replayable and observable.”

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Mobile Client

Expense API

Group Aggregate

Membership Policy

Complete System Design Tutorial

1. Requirements and scope

Functional requirements

Non-functional requirements

2. Capacity assumptions

3. API and data model

Authoritative records and indexes

Command and event envelopes

4. Why this architecture and what it costs

Chosen boundary vs simpler monolith

Correctness vs availability

Operational cost and evolution

5. Critical flow and algorithm

Retry-safe mutation skeleton

6. Caching, hot keys, and backpressure

7. Partitioning and consistency

Strong boundary

Eventual boundary

8. Failure drills and recovery

Recovery checkpoint

9. Security, regions, and observability

Security and abuse

Signals that prove correctness

Regional evolution

10. Interviewer follow-ups

11. How to present this in 45 minutes

Final decision summary

Closing summary