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brc20-fractal-swap-service

This service facilitates the exchange of BRC-20 tokens, leveraging the ordinal theory-based BRC-20 token standard, by establishing a liquidity pool for swapping between different token types.

This project utilizes a decentralized Automated Market Maker (AMM) to enable the swapping of BRC-20 tokens based on ordinal theory. It supports exchanges between BRC-20 tokens and other token types through a liquidity pool mechanism.

Introduction

The Fractal BRC-20 Token Swap Service offers a streamlined solution for exchanging BRC-20 tokens. It operates on the principle of liquidity pools, enabling efficient swaps without relying on traditional order book systems.

Features

  • Support for BRC-20 token swaps.
  • Integration with CAT20 tokens.
  • Automatic price discovery and swap execution.
  • Liquidity pool creation and management.
  • Smart contract-based automation for secure and trustless swaps.

Architecture Overview

The service comprises several key components:

  • Liquidity Pools: The core of the AMM, enabling users to deposit tokens and earn fees.
  • Swap Interface: Provides an intuitive platform for users to perform token swaps and manage liquidity pools.
  • Backend Services: Handles off-chain calculations and optimizations for seamless performance.

Installation

1. Prerequisites:

  • Node.js (latest LTS version recommended)
  • npm or yarn
  • A supported blockchain client (e.g., Ethereum, BRC-20 compatible chain)

2. Clone the Repository:

git clone https://github.com/solguru310/brc20-fractal-swap-service.git
cd brc20-fractal-swap-service

3. Install Dependencies:

npm install

4. Configuration:

Configure environment variables in .env file. (e.g., API keys, blockchain node endpoints)

5. Run the Application:

npm start

Usage

  1. Access the Swap Interface: Visit http://localhost:3000 (default port) to access the user-friendly swap interface.

  2. Swapping Tokens:

    • Select the token pair to swap.
    • Enter the amount and confirm the transaction.
    • Approve the swap through your connected wallet.

  3. Providing Liquidity:

    • Navigate to the 'Liquidity' section.
    • Deposit tokens into a pool to earn a share of the swap fees.

AMM Implementation

The AMM mechanism follows the constant product formula ( x \times y = k ), where x and y are the reserves of the two tokens in a pool, and k is a constant. This approach automatically adjusts prices based on supply and demand.

Key Functions:

  • addLiquidity: Adds tokens to a pool.
  • removeLiquidity: Withdraws a share of tokens from a pool.
  • swapTokens: Executes a swap between two tokens according to the AMM model.

Creating the core functionality of an Automated Market Maker (AMM) with BRC-20 support involves implementing smart contract interactions, liquidity pool mechanics, and swap functionality. Below is a simplified example that provides a starting point.

Directory Structure

The code structure is organized into a TypeScript project:

fractal-brc20-token-swap-service/
├── src/
│   ├── models/
│   │   ├── Token.ts
│   │   ├── LiquidityPool.ts
│   ├── services/
│   │   ├── AMMService.ts
│   ├── utils/
│   │   ├── BlockchainConnector.ts
│   │   ├── MathUtils.ts
│   ├── index.ts
└── tsconfig.json

src/models/Token.ts

export class Token {
  constructor(public address: string, public symbol: string, public decimals: number) {}
}

src/models/LiquidityPool.ts

import { Token } from './Token';

export class LiquidityPool {
  constructor(public tokenA: Token, public tokenB: Token, public reserveA: number, public reserveB: number) {}

  // Mocked method to update reserves
  updateReserves(newReserveA: number, newReserveB: number) {
    this.reserveA = newReserveA;
    this.reserveB = newReserveB;
  }
}

src/services/AMMService.ts

import { LiquidityPool } from '../models/LiquidityPool';
import { MathUtils } from '../utils/MathUtils';

export class AMMService {
  constructor(private pool: LiquidityPool) {}

  // Simple swap logic
  swap(tokenIn: string, amountIn: number): number {
    if (tokenIn === this.pool.tokenA.address) {
      const amountOut = MathUtils.getAmountOut(amountIn, this.pool.reserveA, this.pool.reserveB);
      this.pool.updateReserves(this.pool.reserveA + amountIn, this.pool.reserveB - amountOut);
      return amountOut;
    } else if (tokenIn === this.pool.tokenB.address) {
      const amountOut = MathUtils.getAmountOut(amountIn, this.pool.reserveB, this.pool.reserveA);
      this.pool.updateReserves(this.pool.reserveA - amountOut, this.pool.reserveB + amountIn);
      return amountOut;
    } else {
      throw new Error('Invalid token address');
    }
  }

  // Liquidity management functions
  addLiquidity(amountA: number, amountB: number) {
    this.pool.updateReserves(this.pool.reserveA + amountA, this.pool.reserveB + amountB);
  }

  removeLiquidity(amountA: number, amountB: number) {
    this.pool.updateReserves(this.pool.reserveA - amountA, this.pool.reserveB - amountB);
  }
}

src/utils/MathUtils.ts

export class MathUtils {
  // Computes the amount out for a given amount in
  static getAmountOut(amountIn: number, reserveIn: number, reserveOut: number): number {
    const amountInWithFee = amountIn * 0.997; // Assuming a 0.3% fee
    const numerator = amountInWithFee * reserveOut;
    const denominator = reserveIn + amountInWithFee;
    return numerator / denominator;
  }
}

src/utils/BlockchainConnector.ts

// Placeholder for blockchain interaction logic
export class BlockchainConnector {
  // Example for initializing Ethers.js, make sure to adjust for your use case
  // ...

  constructor(private providerUrl: string) {}

  // Mocked method to retrieve token details
  async getTokenDetails(tokenAddress: string) {
    // Replace with actual blockchain call logic
    return { address: tokenAddress, symbol: 'MOCK', decimals: 18 };
  }
}

src/index.ts

import { Token } from './models/Token';
import { LiquidityPool } from './models/LiquidityPool';
import { AMMService } from './services/AMMService';

// Initialize tokens
const tokenA = new Token('0xTokenA', 'TKNA', 18);
const tokenB = new Token('0xTokenB', 'TKNB', 18);

// Create a liquidity pool
const pool = new LiquidityPool(tokenA, tokenB, 100000, 100000);

// Initialize AMM service with the pool
const ammService = new AMMService(pool);

// Simulate a swap
const outputAmount = ammService.swap(tokenA.address, 100);

CAT20 Token Support

The service also extends functionality to the CAT20 token standard. This involves additional smart contract logic and interface adjustments to ensure compatibility and functionality.

Contact Info:

If you have technical issues & development inquires, please contact here.

Telegram: @dwlee918

X: @derricklee918