This repository contains the smart contracts source code for the DFMM protocol.

The DFMM protocol is a novel portfolio management system designed to leverage external strategy contracts. This system separates the operational logic and the mathematical model: the DFMM core contract completely relies on the strategies to validate the state of each interaction. On the other hand, this core contract acts as a single entry point and performs all the operations, such as:

• Passing the input data to the strategies for validation
• Safely transferring the assets between the users and the core contract
• Tracking the reserves in a singleton pattern
• Tokenizing the liquidity and distributing the LP tokens to the users

The DFMM protocol relies on two main components: the DFMM core contract and the strategies.

This contract is the core of the protocol and is the single entry point for all the user interactions. It also handles all the following operations on the behalf of the strategies:

• Deploying an ERC20 token for each new pool (using the minimal proxy pattern)
• Wrapping / unwrapping native ETH when necessary
• Transferring the assets from or to the user's wallet
• Preventing reentrancy by locking the contract during the operations
• Emitting according events for each interaction
• Keeping track of the reserves for each pool

The strategies are the mathematical models that define the logic of the pools. They all implement a specific trading curve (for example xy=k) and are responsible for validating the state of the pool at each interaction.

flowchart LR
  A(Pool Creator) --> |Creates pool| B[DFMM]
  B --> |Forwards pool parameters| C[Strategy]
  D -...-> |Transfers LP tokens| A
  C -...-> |Validates the creation| B
  B --> |Mints new LP tokens| D[LP Token]

flowchart LR
    A(Pool Creator) --> |Updates pool| B[DFMM]
    B --> |Forwards pool parameters| E[Strategy]
    E -...-> |Validates the update| B

flowchart LR
  A(Liquidity Provider) --> |Provides liquidity| B[DFMM]
  B --> |Forwards pool new state| D[Strategy]
  C -...-> |Transfers LP tokens| A
  D -...-> |Validates pool new state| B
  B --> |Mints new LP tokens| C[LP Token]

This repository uses Foundry, be sure to have it installed or run the following command to install it:

curl -L https://foundry.paradigm.xyz | bash

Then clone the repository along with its dependencies:

git clone [email protected]:primitivefinance/DFMM.git --recurse-submodules

One last step is to set up the environment variables, run this to copy the template:

cp .env.example .env

Then populate the .env file with the required environment variables.

To run all the tests, simply run the following command:

forge t

Learn more about our testing suite here.

You can deploy the contracts with the following command:

$ forge script ./src/script/Deployment.s.sol --rpc-url $OPTIMISM_SEPOLIA_RPC_URL --broadcast --verify -vvv

To build the arbiter run

$ make tex

The DFMM protocol is currently deployed on the following networks:

These terms are used to name specific variables throuhout the codebase and the documentation. They are noted here for clarity and are expected to be reused in the future by strategy developers or contributors.

• The prefix delta is used to denote the amount of tokens or liquidity to be added or removed from a pool: deltaX, deltaY, deltaLiquidity.
• The prefix adjusted is used to denote the amount of tokens or liquidity after the addition or removal of liquidity: adjustedReserveX, adjustedReserveY, adjustedLiquidity.

Contributions are welcome! Check out our guidelines.

The Solidity contracts that make up the DFMM protocol are licensed under the GPL-3.0. The rust sdk in the kit/ directory is Apache 2.