Solana DEX Prototype

A decentralized exchange protocol built on Solana blockchain.

Overview

This project implements a prototype decentralized exchange on Solana with core AMM functionality, including:

• Constant product market maker (x*y=k) implementation
• Liquidity pool creation and management
• Token swapping with slippage protection
• Liquidity provider (LP) token issuance and redemption
• Fee collection mechanism with protocol fee allocation

Features

• Pool Creation: Create trading pairs for any token combination
• Liquidity Provision: Add liquidity and receive LP tokens representing pool share
• Token Swapping: Exchange tokens with automatic price discovery
• Liquidity Withdrawal: Redeem LP tokens for underlying assets
• Fee Structure: Configurable trading fees with protocol revenue sharing

Technical Architecture

The protocol is built using Anchor framework and consists of the following components:

• State Management: Global DEX configuration and pool tracking
• Liquidity Pool Logic: Deposit/withdrawal functions and LP token issuance
• Swap Engine: Trading logic with constant product formula
• Fee System: Collection and distribution of protocol fees

Getting Started

Prerequisites

• Solana CLI
• Anchor Framework
• Rust
• Node.js and Yarn

Installation

1. Install Rust

   curl --proto '=https' --tlsv1.2 -sSf https://sh.rustup.rs | sh

   Verify installation with which cargo and add it to your PATH if needed.

2. Install Solana CLI

   curl --proto '=https' --tlsv1.2 -sSfL https://solana-install.solana.workers.dev | bash

   Verify with solana --version

3. Install Anchor Framework

   cargo install --git https://github.com/coral-xyz/anchor avm --force
   avm install latest
   avm use latest

Building and Testing

1. Build the project

   cd dex
   anchor build

2. Run tests

   anchor test

   This executes all test cases from dex/tests/dex.ts

Development Status

This project is a prototype and is not intended for production use. It demonstrates core DEX functionality but requires additional security audits and optimization before mainnet deployment.

User Interface

A basic UI (purple-ui directory) is included in this repository, but it's currently under development and not yet complete. The interface will eventually allow for:

• Connecting wallet and viewing balances
• Creating and managing liquidity pools
• Adding and removing liquidity
• Performing token swaps
• Viewing transaction history

Implementation Details

The DEX implements:

• Initialization: Admin-controlled setup with configurable fee structure
• Pool Creation: Permissionless creation of liquidity pools
• Liquidity Management: Deposit and withdrawal functions with fair LP token distribution
• Swap Algorithm: Constant product formula with fee calculation
• Protocol Fees: Mechanism for sustainable protocol economics

License

This project is licensed under the MIT License - see the LICENSE file for details.

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This is a development prototype. Not for production use.