I selected the multi-token DEX option as I know little about defi and it therefore seemed a good opportunity to learn how liquidity pools work. My implementation is rather rudimentary and the scope has been limited to Uniswap V1, with the addition of multi-asset pools/swaps.
Liquidity providers can provide liquidity to liquidity pools in exchange for liquidity pool (LP) tokens, which are a claim on pool rewards. Each swap takes a 0.3% commission/fee, which is added to the liquidity pool. A liquidity provider can then redeem their LP tokens at any point to withdraw their liquidity, along with their portion of the rewards.
The implementation is described below, which has been integrated into a working substrate node. I had also hoped to create a simple swap UI using Yew, and explore creating a WebAssembly wrapper such as eth-wasm, but sadly ran out of time.
A special thanks to Sacha and Joshy for their help and patience!
The Substrate node template has been forked and the following pallets have been added. The pallets have been integrated into a working now and the runtime configuration can be found here.
The pallets used to implement the solution are as follows, shown in a somewhat layered order. They unfortunately do not currently provide any protection against front-runnning/sandwich attacks so this is definitely an area to improve.
- An existing FRAME pallet provided by Substrate, used to add multi-asset support
- Asset
0is created at genesis as a proxy of the native currency. Wrapper functions for balance transfers and therefore process the
- A custom pallet implementing a simple decentralised exchange
- Uses the assets pallet
- A new asset is created for each liquidity pool. The asset identifiers start at the end of the
u32range and are decremented each time via theLiquidityPoolAssetIdGeneratorstorage item. This should ideally be using hashes. - Liquidity rewards are generated via fees on each call to the
LiquidityPool.swap()method (viaLiquidityPool::calculate(). - The pallets provide two traits, which exposes pricing and swap functionality to other pallets via loose coupling:
Price:fn price(amount: Balance, asset: AssetId, other: AssetId) -> Result<Balance, DispatchError>Swap:fn swap(amount: Balance, asset: AssetId, other: AssetId, buyer: AccountId) -> DispatchResult;
- A runtime API has also been implemented to provide price oracle functionality. The final portion of implementing a RPC client could not be completed due to trait compiler issues, but I feel like I was on the right track. See here and here and the end of here.
- 97+% test coverage ✅
- Existing FRAME pallet provided by Substrate, used to add non-fungible token support
- A custom pallet for implementing a very simple NFT marketplace.
- Uses the uniques pallet
- Uses the DEX pallet to auto-swap assets to facilitate buying/selling and minting using any asset/token. The pallet will first request the current price from the DEX to ensure that the buyer/minter will have sufficient after the swap to complete the purchase/mint.
- The marketplace doesnt currently charge any fees.
- 0% test coverage 😞 - more of a 'prototype' at this stage.
The genesis config of the chain contains the below:
Alice has been issued amounts of EVIL, WETH and WBTC.
| ID | Symbol | Name | Decimals |
|---|---|---|---|
| 0 | UNIT | Native Token | 18 |
| 1 | EVIL 🤖 | EVIL 🤖 Coin | 18 |
| 2 | WETH | Wrapped Ether | 18 |
| 3 | WBTC | Wrapped Bitcoin | 18 |
The following liquidity pools are created at genesis, funded exclusively by Alice.
| Pool ID | Pair | Liquidity |
|---|---|---|
| 4,294,967,295 | UNIT / EVIL | 100,000 UNIT / 10,000,000 EVIL |
| 4,294,967,294 | UNIT / WETH | 100,000 UNIT / 1,000,000 WETH |
| 4,294,967,293 | UNIT / WBTC | 100,000 UNIT / 500,000 WBTC |
The following areas need work and should be considered as next steps:
- Convert all calculations to use the
checked_variations. - Better handling of minimum/maximum quantities when swapping and slippage.
- Implement tests for the marketplace pallet.
- Complete the pricing oracle JSON RPC implementation.
- Implement a user interface for allowing users to swap assets:
- Listing available liquidity pools (pairs)
- Requesting number of expected output tokens by providing an input quantity and asset type.