NoFeeSwap: Zero-Spread AMM Protocol – Part II | Ramtin Madani & Mehdi Ashraphijuo - NoFeeSwap

if you haven't checked out the art gallery uh we have some incredible artists uh with a theme uh hero versus villain so go check that out if you haven't already uh next up we have medy uh Ash raidu and Ramon uh madani from noi Swap and they're going to be talking about noi swap a zero spread automated Market making protocol part two features thank you thank you all right hello everyone thank you for joining us my name is ramtin madani in this presentation we are going to introduce some of the unique features of the nois swap protocol we shared our codebase with the community earlier this week for the first time after our security audits first we provide a summary of the features then we'll go over more explanations on each item we are first going to talk about customization within concentrated liquidity intervals we want to do it in a way that LP growth and security would be guaranteed let's talk about the existing platforms first in a Unis swap V3 pool these liquidity distributions are all you get either half of every liquidity interval is empty which is not efficient uh or all of it is empty which is not an amm anymore just two constant prices One price for buying and the other prices for selling with unisoft V4 you can move around the fee basically fee is a big tradeoff between LPS profit per trade and volume and you can also rely on hooks with custom cures but there is an issue of security there's an issue of solvency basically in Unis swap V4 the security of custom curves is outsourced to Hooks and we don't know what is going to happen if something goes wrong with those hooks hopefully they they won't throw hook developers under the bus because as we'll demonstrate later in this presentation it is not a straightforward to design a secure custom curve what noi swap offers is full flexibility and at the same time time an underlying mathematical Foundation is present at protocol level that guarantees LP growth and security here is an example of a simple Formula One can use for liquidity provision in each interval of noi Swap and Noy swap has great emphasis on security this is because the design of a custom care is difficult say you want to improve the x y equal to one formula using a hook in Unis swap V4 you may want to do that using an alternative formula you may want to do that using Dynamic fees or moving around liquidity via hooks or even building your own custom accounting from a scratch there is a lot of issues that may arise for instance the price should be respected in transition from a curve to another and this can be very easily mishandled here as you can see a sequence of swaps has bypassed the pool's logic if a slippage is not enforced aggressively enough we encounter the same issue because the new curve is underneath the old one and if a slipage is too much we are basically wasting liquidity noi swap handles all of these security concerns for you on chain next I'm going to talk about zero spread one major benefit of this zero spread framework is that you get a lot more trade activity within the highlighted region and the pools have pinpoint price accuracy pools can do all sorts of optimization using arbitrary liquidity distribution functions they will not lose volume or Price stenness or even security concerns another major drawback up there is the absence of compounding the collected fees are not added back to the liquidity pool but no swap offers compound growth for liquidity providers another feature is that uh trades are not limited to Native and erc20 tokens you can even swap multi- tokens one cool thing is that you can trade noi swap liquidity positions as well next we're going to briefly mention mention the no swap operator contract with the conventional slippage control mechanisms this is all you get the outgoing and incoming amounts are compared against given thresholds and it doesn't fully mitigate consensus layer risks it just reduces them with no swap uh the operator contract uh you can program your own method of slipage control or router you can easily incorporate any logic it is like the evm itself next I'm going to talk about hooks the yellow paper explains how Noy swap hooks operate for example the hooks do not need to access pool data externally it is offered to them for free there are a number of sing singl features as well for instance no swab allows you to handle evm storage more efficiently because you can incorporate multiple balances into a single storage slot there's also an incentive program in place through which the pools of the six purs can be rewarded with noys swap governance tokens we consider adding additional pairs as well please see the yellow paper for more details there's a vault for nois swap governance tokens in which you can deposit your tokens to be rewarded with more tokens additionally while depositing you do not lose the ability to vote you can still delegate your voting power to yourself or any other wallet there are many other features and tools for example say you want to deposit liquidity in a stable pool where the price is always around one consider unisoft V3 or V4 the ti that corresponds to price equal to one can be constantly touched by swappers because there is no offset and this is another source of inefficiency the way this is handled in Noy swap is through a price offset another cool feature is the ability to modify liquidity distribution dynamically if appropriate permission flags are set we will also cover additional new tools for arbitragers the project introduces tons of new evm based math functions for deaths to look at the purpose was to develop tailored functions with the highest level of gas efficiency let me go over a couple of examples there is this chip mold function that comes pretty handy with minimal gas and there is a very precise exponential function that the protocol uses so in the remainder of this presentation we elaborate a bit more on some of the features that we just introduced so the first Fe feature that we are going to discuss more is customized with customization within concentrated liquidity intervals um to this end we need to briefly cover conventional amms most of you are probably familiar with the well-known amm formula XY equal to 1 um there are other variants of this formula such as the ones adopted by the curve protocol such as XY + x + y = to 3 or the balancer formula the main idea behind no swab is to allow you to choose your own arbitrary curve and it can be anything it doesn't even have to be a closed form uh algebraic expression like the above ones Noy swab is basically a safe and fair amm environment for people to create their own custom curves and they can make it it as customized as they want as long as it's safe and it can be incorporated you know into Unis swap conventional protocols make money by imposing a fee the fee can be interpreted as a liquidity Gap or it can be seen as a bent curve as you see here the curve is not smooth it is in fact pointed the left boundary is the Buy price and the right boundary is the sell price in Noy swap pools can adopt a kernel function which determines how aggressively they want to charge slippage at each price point it can be as sci-fi as you want like this figure or it can be something simple based on the given kernal functions your curves are then constructed on top of each other according to a set of formulas after each swap a new curve is generated on top of the old one these are smooth and differentiable curves that are tangent to each other with zero bicell spread like layers of onion and that's how liquidity uh keeps growing we go from a lower point to a higher Point next we are going to talk about the zero spread feature here is unis swab V3 as described before nois swab is all about eliminating the liquidity gaps that you see in conventional dexes which is even more problematic for for stable coins as you can see here we see a much wider liquidity Gap now as an interesting thing about Noy swap is that it allows you to close this Gap however you want and still make money for LPS There is no price stess and there is liquidity available at every price which leads to higher volume you you can make it look like this you can make it look like that as customize as you want next we are going to talk about how concentrated liquidity is handled by Noy swap in every Noy swap liquidity pool the logarithmic price Horizon is divided into a sequence of intervals you can set whatever Offset you like for the price the LPS have the option to deposit their liquidity in any continuous range of their choosing they receive shares and these shares become more and more valuable with swaps we keep track of this we parameter which is called growth in other words when a liquidity interval is touched via either a swap or donate the amount of liquidity that interval grows with compounding upon initialization the pool owner provides a kernel function and the liquidity in each interval is distributed based on this function it can even change dynamically if a permission flag in pool ID is set next we are going to talk about tags every token or multi-token asset which may be traded on no swap Singleton is assigned a tag a tag may refer to any of the following unchain assets it may correspond to Native tokens it may correspond to erc20 fungible tokens tags may even refer to multi- tokens and they can also refer to Noy swaps liquidity positions all of these assets can be traded on Noy swap we're going to talk about the operator contract next we want to offer most flexibility to people so that they can Implement and pay for whatever slip head checks that they deem necessary this is why the slip head checks is not hard cuted like other platforms for instance you can invoke Noy swap unlock method from your wallet the operator contract is then invoked by core and then the operator takes care of everything on your behalf the next feature that I would like to cover concerns Hooks and permissions polls have the option to subscribe to a hook contract of their choosing there are 17 permission flags for each hook and uh when a hook is invoked an entire snapshot of memory is given to the hook has call data and all of the pool can be accessed using a dedicated library that can be used by hooks at least one of the initialized hooks needs to be activated upon the uh you know a pool initialization and there are three hooks associated with uh depositing liquidity um three hooks associated with withdrawing liquidity three hooks associated with swaps three hooks associated with donations to the active liquidity intervals and you can invoke hooks up on kernel modifications which modifies the distribution of liquidity there is a permission flag which determines whether kernels can ever be modified as a pool owner you can you may be rewarded with a portion of the pool's liquidity growth this has to be permitted by the protocol and uh there is a flag which determines whether the portion can ever be updated lastly there is a flag which determines whether donations are allowed next we are going to cover some of the singl tone features to further reduce gas cost the Singleton can be used instead of wallets we are also allowed we're also allowing accounts to store multiple balances in one storage slot to further save gas you can transfer money from your wallet to the Singleton contract and receive multi- token credit and these balances are much cheaper to interact with we also allow accounts to store two balances in one um storage slot to further save gas when executing a um complicated swap router it doesn't matter how many pools you are interacting with uh when you interact with a pool the outgoing and incoming amounts are credited to the single tone transient storage and you decide on how you want to pay them more about the additional features that noi swap introduces let's say you want to do a swap this is the interface that you would be dealing with you need to specify the pool ID you can specify your outgoing amount or incoming amount and this would be a constraint Imports on your swap so the traded amount will not go beyond this value we can also completely relax this requirement by setting a plus or minus infinity this parameter is the maximum logarithmic price limit that you as a swapper would be comfortable with swappers have the option to choose uh either direction via this uh 041 input which is pretty standard but note that the uh type here is an unsigned integer this is because you can pass any arbitrary value greater than one to indicate that the direction is arbitrary um arbitrary direction is particularly useful for advanced arbitragers that don't care about the direction and want the direction to be determined based on the uh L price limit uh there is an optional hidden uh parameter called cross threshold which is embedded as the most significant 128 bits of uh 041 on the cross threshold parameter can prevent the swap mechanism from entering uh low liquidity intervals uh this is a standard uh hook data input as well and the content will be relayed directly to the hook contract associated with it and uh there's a standard hook data as well which I mentioned and lastly the outgoing and incoming um token amounts are returned as the output of the swap method and so in summary the sense of this protocol is to allow you to be as creative as you want with amm uh while protecting LPS please reach out uh to us and check out our GitHub repositories we are now active on all social media and we're looking forward to hearing from you your Insight and your ideas if you're interested there are tons of opportunities in our group we are always uh welcoming fresh talents thank you very much