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Swaps

Swaps are the core trading mechanism in the Oyl AMM protocol. They allow users to exchange one token for another using the liquidity stored in pools.

How Swaps Work​

Constant Product Formula​

Swaps in Oyl AMM follow the constant product formula:

x * y = k

When a user swaps token A for token B:

  1. Token A is added to the pool's reserve
  2. Token B is removed from the pool's reserve
  3. The product k remains constant (minus fees)
  4. Price adjusts based on the new reserve ratio

Price Impact​

The price impact of a swap depends on:

  • Trade size: Larger trades have higher price impact
  • Pool liquidity: More liquidity means lower price impact
  • Current reserves: Imbalanced pools have higher impact

Swap Types​

Exact Input Swaps​

User specifies exact amount of input tokens:

SwapExactTokensForTokens {
    path: Vec<AlkaneId>,        // Token path for the swap
    amount_out_min: u128,       // Minimum output amount
    deadline: u128,             // Transaction deadline in block height
}

Exact Output Swaps​

User specifies exact amount of output tokens:

SwapTokensForExactTokens {
    path: Vec<AlkaneId>,        // Token path for the swap
    amount_out: u128,           // Exact output amount desired
    amount_in_max: u128,        // Maximum input amount
    deadline: u128,             // Transaction deadline in block height
}

Multi-hop Swaps​

Path Routing​

For tokens without direct pairs, swaps can route through multiple pools:

Token A → Token B → Token C

The path parameter defines the route:

  • First element: input token
  • Last element: output token
  • Intermediate elements: routing tokens

Swap Calculations​

Output Amount Calculation​

For exact input swaps:

fn get_amount_out(amount_in: u128, reserve_in: u128, reserve_out: u128) -> u128 {
    let amount_in_with_fee = amount_in * 995;
    let numerator = amount_in_with_fee * reserve_out;
    let denominator = (reserve_in * 1000) + amount_in_with_fee;
    numerator / denominator
}

Input Amount Calculation​

For exact output swaps:

fn get_amount_in(amount_out: u128, reserve_in: u128, reserve_out: u128) -> u128 {
    let numerator = reserve_in * amount_out * 1000;
    let denominator = (reserve_out - amount_out) * 995;
    (numerator / denominator) + 1
}

Slippage Protection​

Minimum Output​

For exact input swaps, specify minimum output:

amount_out_min: u128  // Revert if output is less than this

Maximum Input​

For exact output swaps, specify maximum input:

amount_in_max: u128   // Revert if input exceeds this

Deadline Protection​

All swaps include deadline protection:

deadline: u128        // Revert if block height exceeds this

Low-Level Swap Function​

Direct Pool Swap​

Advanced users can call the pool's swap function directly:

Swap {
    amount_0_out: u128,     // Amount of token0 to receive
    amount_1_out: u128,     // Amount of token1 to receive
    to: AlkaneId,           // Recipient address
    data: Vec<u128>,        // Additional data for flash swaps
}

Warning: Direct swaps bypass safety checks and should only be used by experienced developers.

Flash Swaps​

Concept​

Flash swaps allow borrowing tokens from a pool without upfront payment:

  1. Receive tokens from the pool
  2. Use tokens in external operations
  3. Repay the pool (with fee) in the same transaction

Use Cases​

  • Arbitrage opportunities
  • Liquidations
  • Complex trading strategies

Best Practices​

Slippage Management​

  • Calculate expected output off-chain
  • Set appropriate slippage tolerance
  • Consider market volatility

Deadline Setting​

  • Use reasonable deadlines (~30 minutes)
  • Account for network congestion
  • Avoid very short deadlines

Route Selection​

  • Check multiple paths for best rates
  • Consider fuel costs for multi-hop swaps
  • Monitor pool liquidity

Swaps are the primary way users interact with the Oyl AMM protocol, providing efficient and decentralized token exchange.