SimpleCPMM

A basic Automated Market Maker (AMM) smart contract implementation with a single pool of two paired ERC20 tokens. The AMM uses the Constant Product Market Maker (CPMM) formula x * y = k, which is the foundation of protocols like Uniswap.

Overview

SimpleCPMM is a minimal implementation of an AMM that demonstrates core DeFi concepts including:

• Liquidity provision and removal
• Token swapping with slippage protection
• Reward distribution for liquidity providers
• Constant Product Market Maker mechanics

Key Features

• Single pool for two ERC20 tokens
• CPMM-based price determination
• Liquidity provider reward system
• Slippage protection for trades
• Comprehensive test coverage
• Emergency withdrawal capabilities

Prerequisites

• Git
• Foundry

Installation

1. Clone the repository

git clone https://github.com/Signor1/simpleCPMM.git
cd simpleCPMM

2. Install dependencies

forge install

Testing

Run the test suite:

forge test

Run tests with gas reporting:

forge test --gas-report

Run a specific test:

forge test --match-test testFunctionName

Run tests with verbosity:

forge test -vv

Contract Overview

BasicPool.sol

The main contract implementing the AMM functionality:

• Token Management

  • Paired ERC20 tokens (TokenA and TokenB)
  • Reservoir tracking for both tokens
  • Owner-controlled token address setting

• Liquidity Functions

  • addLiquidity(uint256 amountA, uint256 amountB)
  • removeLiquidity()
  • Proportional liquidity share calculation

• Swap Functions

  • swapAForB(uint256 amountAIn, uint256 minAmountBOut)
  • swapBForA(uint256 amountBIn, uint256 minAmountAOut)
  • Slippage protection
  • Price impact consideration

• Reward System

  • Reward distribution for liquidity providers
  • Reward claiming mechanism
  • Configurable reward rate

Test Coverage

The test suite (BasicPoolTest.sol) includes comprehensive testing of:

• Liquidity provision and removal
• Swap functionality
• Price impact scenarios
• Reward distribution
• Edge cases and extreme scenarios
• Concurrent operations
• Owner functions

Technical Details

CPMM Formula

The pool uses the constant product formula:

x * y = k

where:

• x is the reserve of TokenA
• y is the reserve of TokenB
• k is the constant product

Price Impact

Swap amounts are calculated using:

amountOut = (reserveOut * amountIn) / (reserveIn + amountIn)

This formula ensures:

• Larger trades have higher price impact
• Pool maintains constant product after swaps
• Automatic price adjustment based on supply/demand

Liquidity Provider Rewards

• Rewards are distributed proportionally to liquidity share
• Reward rate is configurable (default 1%)
• Rewards are tracked per LP and can be claimed as Pool Reward Tokens

Development

Smart Contract Tools

• Framework: Foundry
• Solidity Version: ^0.8.20
• OpenZeppelin Contracts:
  • ERC20
  • SafeERC20
  • Ownable
  • ReentrancyGuard

Local Development

1. Install Foundry components:

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

2. Compile contracts:

forge build

3. Run tests:

forge test

Security Considerations

• The contract includes reentrancy protection
• Slippage protection for swaps
• Owner-only functions for critical operations
• Emergency withdrawal capability
• Basic input validation

Note: This is a basic implementation for educational purposes. Additional security measures would be needed for production use.

License

MIT License

Contributing

1. Fork the repository
2. Create a new branch
3. Make your changes
4. Submit a pull request

Author

Signor1