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Constant-product AMM

Specification

Tiny AMM (Automated Market Maker) allows users to deposit, redeem, and swap a pair of ERC20 tokens in a decentralized manner.

The constructor takes two addresses, representing the pair of ERC20 tokens to be used in the exchange (t0,t1).

To make a deposit x0 and x1 must be provided, which are the amount of t0 and t1 tokens, respectively. The specified amounts of tokens are transferred from the sender's address to the contract. If deposits have been made before, the current exchange rate between t0 and t1 tokens must be maintained. Based on the deposit conditions, the number of liquidity tokens is calculated to be minted and are assigned to the sender's address.

To redeem the previously provided liquidity and receive the corresponding amounts of t0 and t1 tokens from the decentralized exchange, users must provide a positive value for x, representing the amount of liquidity tokens they want to redeem. The proportional amounts of t0 and t1 are calculated to be returned to the sender. The calculated amounts of tokens if transferred from the contract to the sender's address.

Users can perform a token swap between t0 and t1 tokens by specifying the token to be swapped, the input amount, and the minimum desired output amount. The input tokens are transferred from the sender's address to the contract and the output amount based on the input amount and the exchange rates is calculated. Subsequently, the output tokens are transferred to the sender's address. The token balances in the liquidity pool, represented by r0 and r1, are updated based on the direction of the swap. Finally, it is ensured that the contract holds the correct balances of t0 and t1 tokens to maintain the integrity of the exchange.

Required functionalities

  • Custom tokens
  • Revert transactions
  • Rational arithmetics / arbitrary-precision arithmetics

Implementations

  • Solidity/Ethereum: implementation coherent with the specification.
  • Anchor/Solana: a step has been added for initializing the data of the AMM contract (supply, if ever deposited, resources, mints, etc.).
  • Aiken/Cardano:
  • PyTeal/Algorand:
  • SmartPy/Tezos:
  • Move/Aptos: