AMM

Example of simple Automated Market Maker on Elrond network for studying purpose.

Inspired by tutorial https://learn.figment.io/tutorials/build-polkadot-amm-using-ink.

Stack

Contract: Rust

Frontend: SvelteKit framework

Links

Working example: https://amm-elrond.netlify.app/

https://user-images.githubusercontent.com/143357/210095255-3633ec8b-c1b7-4569-82b5-e30a319068f4.mov

Basic terms in pictures

Liquidity Pool (LP)

Collection of tokens or digital assets locked in a smart contract that provide essential liquidity to decentralized exchanges (DEX). A DEX is an exchange that doesn't rely on a third party to hold users' funds. Instead, DEX users transact with each other directly.

Playing with numbers we can see:

• the rate isn't used in way we would expect at first glance
• the number precision issue casued by missing decimal numbers (contract is using BiguUint). Based on the fact that basic unit (eg. Wei) for tokens are usually in 12-18 precision (1 ETH == 1000000000000000000 Wei) compare to used unit (eg. ETH) is this inconsistency is hidden. In example below is difference noticable as we are using small numbers to demostrating it.

Slippage

Slippage is the price difference between when you submit a transaction and when the transaction is confirmed on the blockchain.

Arbitrage

Besides smart contract algorithms, liquidity pools rely on arbitrage traders to ensure a digital asset's quoted price is accurate. Arbitrage is a strategy where traders capitalize on a slight price discrepancy on a token between two exchanges

Run FE

Please check comments which polyfill to use for local dev and for production release in vite.config.js.

In fe-svelte-kit directory run:

pnpm install
pnpm run dev

Tests

Run tests: NOTE: only my local ... if there is issue with compiling contract (..unknown command: cargo.) remove rust from asdf as it is in some collision w/ rustup.

erdpy contract build
erdpy contract test

Interaction (deploy, querying, ...)

In examples is proxy set to https://devnet-gateway.elrond.com, change it if you want to work with different chain

For deploy/upgrade

Run interaction python script and chose 1. Deploy

python3 ./interaction/playground.py --pem=./wallet/walletKey.pem --proxy=https://devnet-gateway.elrond.com

The contract is already deployed on address erd1qqqqqqqqqqqqqpgqmq04sd9355zryhek7lly4a4sspxdwwg453ds53uesn (devnet) or erd1qqqqqqqqqqqqqpgqgczuv6u6mgdewj4amsm5nnysk3404md253ds92srw6 (testnet)

Sources

• https://docs.rs/elrond-wasm/latest/elrond_wasm/
• https://docs.elrond.com/developers/overview/
• https://docs.elrond.com/sdk-and-tools/erdjs/erdjs/
• https://docs.elrond.com/sdk-and-tools/erdjs/erdjs-cookbook/
• https://medium.com/@henryhienton/how-to-create-a-crypto-wallet-generating-a-pem-file-on-the-elrond-devnet-network-e545ab3a4a11
• https://docs.elrond.com/sdk-and-tools/erdpy/deriving-the-wallet-pem-file/
• https://elrondnetwork.github.io/elrond-sdk-docs/erdjs/latest/modules/typesystem.html