Building an SDK v0.1.24 – Balancer Relayers and Pool Migrations

What Is A Relayer?

A relayer is a contract that is authorized by the protocol and users to make calls to the Vault on behalf of the users. It can use the sender’s ERC20 vault allowance, internal balance and BPTs on their behalf. Multiple actions (such as exit/join pools, swaps, etc) can be chained together which improves the UX.

For security reasons a Relayer has to be authorised by the Balancer DAO before it can be used (see previous votes for V1 and V2) and even after authorisation each user would still be required to opt into the relayer by submitting an approval transaction or signing a message.

How It Works

Contracts

The Balancer Relayers are composed of two contracts, BalancerRelayer, which is the single point of entry via the multicall function and a library contract, such as the V3 VaultActions, which defines the allowed behaviour of the relayer, for example – VaultActions, LidoWrapping, GaugeActions.

Having the multicall single point of entry prevents reentrancy. The library contract cannot be called directly but the multicall can repeatedly delegatecall into the library code to perform a chain of actions.

Some psuedo code demonstrating how an authorisation, exitPool and swap can be chained and called via the multicall function:

const approval = buildApproval(signature); // setRelayerApproval call
const exitPoolCallData = buildExitPool(poolId, bptAmt); // exitPool call
const swapCallData = buildSwap(); // batchSwap call

const tx = await relayer.multicall([approval, exitPoolCallData, swapCallData]);

Approval

A user has to approve each Relayer before they can use it. To check if a Relayer is approved we can use hasApprovedRelayer on the Vault:

const isApprove = await vault.hasApprovedRelayer(userAddress, relayerAddress)

And we can grant (or revoke) approval for a given relayer by using setRelayerApproval:

const approvalTx = await vault.setRelayerApproval(userAddress, relayerAddress, isApprove);

A Relayer can also be approved by using the setRelayerApproval function from the BaseRelayerLibrary contract. Here a signed authorisation message from the user is passed as an input parameter. This allows an approval to be included at the start of a chain of actions so the user only needs to submit a single transaction creating a better UX.

Chained References

Output References allow the Relayer to store output values from once action which can then be read and used in another action. This allows us to chain together actions. For example we could exit a pool, save the exit amounts of each token to a reference and then do a batchSwap using the references as input amounts for each swap:

An OutputReference consists of an index and a key:

struct OutputReference {
  uint256 index;
  uint256 key;
}

Where the key is the slot the value will be stored at. Index indicates which output amount should be stored. For example if exitPool exits to 3 tokens, DAI (index 0), USDC (1), USDT (2), we would want to use index 0 to store DAI, 1 for USDC, etc.

Example Use Case – Pool Migration

Intro

Balancer aims for the best capital efficiency for LPs so it made sense to offer the option to migrate from the old “staBal3” pool consisting of DAI, USDC and USDT to a new “boosted” stable pool which is more capital efficient because it uses yield bearing assets.

To migrate between these pools would take multiple steps:

  1. unstake from staBal3 gauge → staBalBpt
  2. exitPool from staBal, staBalBpt → DAI, USDC, USDT
  3. join the bb-a-usd2 pool by using batchSwaps
    1. DAI → bbausd2Bpt
    2. USDC → bbausd2Bpt
    3. USDT → bbausd2Bpt
  4. stake bbausd2Bpt in gauge

This would be quite an ordeal for a user to do manually but the Relayer can be used to combine all these actions into a single transaction for the user.

Details

As this is a well defined one off action we decided to add this function to the SDK as a “Zap” under a Migrations module. The user can call the staBal3 function to get all the call data required to call the tx:

{ to, data } = migrations.stabal3(
  userAddress,
  staBal3Amount,
  minBbausd2Out,
  isStaked,
  authorisationSignature
);

Behind the scenes all the call data for each step is crafted and the encoded multicall data is returned:

calls = [
        this.buildSetRelayerApproval(authorisation),
        this.buildWithdraw(userAddress, staBal3Amount),
        this.buildExit(relayer, staBal3Amount),
        this.buildSwap(minBbausd2Out, relayer),
        this.buildDeposit(userAddress),
      ];

const callData = balancerRelayerInterface.encodeFunctionData('multicall', [
      calls,
    ]);

buildSetRelayerApproval allows the user to pass the approval signature if this is their first time using the relayer. This allows us to approve and execute the migration all in a single transaction.

buildWithdraw and buildDeposit handle the gauge actions. The initial call is to withdraw from the staBal gauge and the final call deposits the bbausd2 bpt into the new gauge. We withdraw directly to the Relayer address rather than the users. The gauges return the tokens to the caller, so sending them to the user costs more as we need to manually transfer them:

gauge.withdraw(amount);
// Gauge does not support withdrawing BPT to another address atomically.
// If intended recipient is not the relayer then forward the withdrawn BPT on to the recipient.
if (recipient != address(this)) {
    IERC20 bptToken = gauge.lp_token();
    bptToken.transfer(recipient, amount);
}

Skipping this has two benefits. Firstly it saves gas by avoiding an extra transfer. It also avoids approval issues as now the Relayer is just using its own funds. The final deposit uses the userAddress to send the staked tokens from the Relayer back to the user.

buildExit creates the exitPool call:

// Ask to store exit outputs for batchSwap of exit is used as input to swaps
    const outputReferences = [
      { index: assetOrder.indexOf('DAI'), key: EXIT_DAI },
      { index: assetOrder.indexOf('USDC'), key: EXIT_USDC },
      { index: assetOrder.indexOf('USDT'), key: EXIT_USDT },
    ];

    const callData = Relayer.constructExitCall({
      assets,
      minAmountsOut: ['0', '0', '0'],
      userData,
      toInternalBalance: true,
      poolId: this.addresses.staBal3.id,
      poolKind: 0, // This will always be 0 to match supported Relayer types
      sender,
      recipient: this.addresses.relayer,
      outputReferences,
      exitPoolRequest: {} as ExitPoolRequest,
    });

Output references are used to store the final amounts of each stable token received from the pool. We have precomputed the keys by using the Relayer.toChainedReference helper, like:

const EXIT_DAI = Relayer.toChainedReference('21');
const EXIT_USDC = Relayer.toChainedReference('22');
const EXIT_USDT = Relayer.toChainedReference('23');

These will be used later as inputs to the swaps.

Also of interest is the fact we set toInternalBalance to true. The Balancer V2 vault can accrue ERC20 token balances and keep track of them internally in order to allow extremely gas-efficient transfers and swaps. Exiting to internal balances before the swaps allows us to keep gas costs down.

Because we have previously exited into internal balances we also don’t have to worry about the users having previously approved the Relayer for the tokens:

if (fromInternalBalance) {
// We take as many tokens from Internal Balance as possible: any remaining amounts will be transferred.
uint256 deductedBalance = _decreaseInternalBalance(sender, token, amount, true);
// Because deductedBalance will be always the lesser of the current internal balance
// and the amount to decrease, it is safe to perform unchecked arithmetic.
amount -= deductedBalance;
}

if (amount > 0) {
token.safeTransferFrom(sender, address(this), amount);
}

so the amount will be 0 and the safeTransferFrom call will not be executed.

buildSwap – We can join bbausd2 using a swap thanks to the PhantomBpt concept so here we create a batchSwap call that swaps each stable token to the bbausdBpt and we use the output references from the exitPool call as the input amounts to the swap (which is great as we don’t need to precompute these).

const swaps: BatchSwapStep[] = [
    {
      poolId: this.addresses.linearDai2.id,
      assetInIndex: 1,    // DAI
      assetOutIndex: 2,   // bDAI
      amount: EXIT_DAI.toString(),
      userData: '0x',
    },
    {
      poolId: this.addresses.bbausd2.id,
      assetInIndex: 2,  // bDAI
      assetOutIndex: 0,  // bbausd2
      amount: '0',
      userData: '0x',
    }
    ...
    {
      poolId: this.addresses.linearUsdc2.id,
      assetInIndex: 3,  // USDC
      assetOutIndex: 4, // bUSDC
      amount: EXIT_USDC.toString(),
      userData: '0x',
    },
    ...

In the Relayer VaultActions contract we can see how the swap amounts are set to the value stored in the reference:

for (uint256 i = 0; i < swaps.length; ++i) {
	uint256 amount = swaps[i].amount;
  if (_isChainedReference(amount)) {
	  swaps[i].amount = _getChainedReferenceValue(amount); //e.g. EXIT_DAI
  }
}

And finally (😅) we use another output reference to store the total amount out of bbausd2:

const outputReferences = [{ index: 0, key: SWAP_RESULT_BBAUSD }];

This is used as an input to the final gauge deposit to make sure we stake all the BPT that we have received and that should conclude the migration! You can see this in action on a local fork (yay no real funds required!) by running the integration test here.

Conclusion

The Balancer Relayer is probably not that well known so hopefully this has given a good overview of some of its functionality and flexibility. There’s a lot of room for experimentation and improvement of UX for complex operations so its worth investigating!

Photo by Austrian National Library on Unsplash

Building an SDK 0.1.14 – Adding a Contracts module

Intro

The idea of adding this was to make accessing Balancer contracts easier for users. Normally you need to find and import ABIs and deal with deployment addresses, if we want to make it easy we should just remove that complexity.

Also we are trying to make the main SDK functions return the contract name and functions as part of the attributes returned. This means the user could then just call using something like:

const { contractName, functionName, attributes } = transactionAttributes;

sdk.contracts[contractName][functionName](attributes)

Typechain

Typechain is a package that provides TypeScript bindings for Ethereum contracts. This means functions are statically typed and there is also IDE support which makes things safer and easier to develop against.

Balancer has its own @balancer-labs/typechain package that exposes instances of the commononly used contracts. Adding this to the SDK means we can remove the need to import ABI jsons and we can now create instances of contracts by doing:

import {
    Vault__factory
} from '@balancer-labs/typechain';

Vault__factory.connect(
            this.networkConfig.addresses.contracts.vault,
            provider
        );

which will return a typed Vault contract.

Module

  • Uses BALANCER_NETWORK_CONFIG and config.network to find vault/lidoRelayer/multicall addresses.
  • Added contracts getter to SDK module:
constructor(
        public config: BalancerSdkConfig,
        public sor = new Sor(config),
        public subgraph = new Subgraph(config),
        public pools = new Pools(config),
        public balancerContracts = new Contracts(config, sor.provider)
    ) { ... }

get contracts(): ContractInstances {
        return this.balancerContracts.contracts;
    }

This can then be called like:

const vaultContract = balancer.contracts['vault'];

or:

const vaultContract = balancer.contracts.vault

which will provide typed function refs.

Tradeoffs

One interesting discussion is the trade off of using the Contracts module within other modules. As of now only the Swaps and Multicaller modules using contracts. Using the Contracts module means we either have to pass Contracts in constructor, which adds an extra step if someone want to use modules independently:

const contracts = new Contracts(config)
const swaps = new Swaps(config, contracts)

or we instantiate Contracts within the module – which ends up happening twice if we use the high level SDK function as it is also instantiated there. For now we have decided to use the Typechain factories to instantiate the contracts within the module and will revisit in future if needed.

Photo by Pablo Arroyo on Unsplash

Forking Brilliant

Houston We Have A Problem

I want to check that a transaction will work on mainnet for an account I don’t control. In this case it’s for a large LP in the Balancer staBal3 pool and I want to check they could successfully migrates their staBal3 to the new bb-a-USD using a Relayer multicall with the params created by the SDK.

This definitely isn’t the most elegant way of doing things but it works!

Whale Hunting

The first thing I need to do is to find a large staBal3 LP account and figure out their BPT balance. I can use the Balancer Subgraph to query account pool shares for the staBal3 pool. Query looks like:

query MyQuery {
  poolShares(where: {poolId: "0x06df3b2bbb68adc8b0e302443692037ed9f91b42000000000000000000000063"}, orderBy: balance, orderDirection: desc) {
    id
    balance
  }
}

I then manually worked my way down the list of addresses until I found one that was an EOA: https://etherscan.io/address/0x4086e3e1e99a563989a9390facff553a4f29b6ee and at the time of investiagation this had a BPT balance of: 10205792.037653741889318463 (a cool $10.28mil!).

Exit Stage Right

The SDK helper function (relayer.exitPoolAndBatchSwap) that creates the call data requires an input param of expectedAmountsOut which in this case represents the DAI/USDC/USDT amounts out when exiting the staBal3 pool. Because I don’t have the maths required for this exposed yet a quick way to get this is to see the output amounts using Withdraw in the UI. There’s a very nice tool that allows us to simulate this when we don’t have control of the account of interest: https://www.impersonator.xyz/

Now that I’ve got all the info required I can generate the call data by using the helper function. In this case we get an array of call data which represent an exitPool call on staBal3 followed by a batchSwap that swaps the stables received from the exit to the bb-a-USD BPT.

The Magic

Tenderly has lots of useful features including Transaction Simulations. To begin I tried simulating the multicall call on the Mainnet Relayer but the tx failed highlighting a new issue – the account hasn’t approved the Balancer Relayer. To get around this I can use a Tenderly Fork – “Forks allow you to chain simulation and test out complex scenarios with live on-chain data”. This is cool because I can now fork the chain make an approval on the relayer from the account which then allows me to succesfully simulate the multicall!

Photo by Joel Muniz on Unsplash

You Can Do It!

At Balancer we recently finished a pretty major release and it was probably the most stressful release I’ve been involved in with there so far. I wanted to write this as a kind of log of a cool thing I helped build but also as a reminder that its possible to get through the tough times and come succesfully out the other side!

The release was actually two pretty major things – first there was the launch of Balancers MetaStable pools, and second was a partnership with Lido. MetaStable pools allow pools of tokens with highly correlated prices, for example cDAI and DAI and Lido were making use of a MetaStable pool to launch an incentivised WETH/wstETH pool. We integrated Lido pretty deeply and the goal was to support trades in stETH by using a Relayer contract to wrap/unwrap automatically, this meant we also had to take into account the stETH/wstETH exchange rates for calcualtions and display. We also wanted to make use of the deep WETH/Stable liquidity Balancer has and allow stable <> Lido trades, this was a slight issue because it involved a two hop trade (i.e. USDC > DAI > WETH > wstETH) which the SOR doesn’t currently support so we had to add static routes for those.

There was a lot going on across all the different teams in Balancer with some fairly tight/strict deadlines. At the time (and actually still now) there’s no Product Manager at Balancer so there wasn’t really someone managing the project. Because of this it very much felt like cat herding and some of the communication could have been better. Also things were changing a lot quite close to the deadline which made things pretty stressful for someone like me who likes to try and get things done early! The last mistake was the deployments of everything happened over the weekend for a Monday launch which wasn’t ideal. These are all things that are being addressed now that we’ve had some retrospectives – Balancer always seem good at continuously trying to improve.

A lot of this probably won’t make a great deal of sense but some of the things that I touched during the work:

  • SOR Hardcoded paths
  • SOR MarketSP support
  • Swap amount via query
  • Stable pool issues due to invariant
  • Subgraph update and rollout
  • Kovan test deployment:
    • stETH + wstETH token on Kovan
    • Faucet for wstETH
    • Correct pools
    • Relayer
  • Relayer – authorisation and approval debug
  • Relayer join/exits being canned after I spent time on them,
  • Limits on front-end
  • Front-end using correct stETH/wstETH exchange

And there was a whole bunch of other stuff being worked on across other teams.

And at the end of it all we made it! The launch went ahead smoothly and on time. The Lido pools are already some of the largest in the Balancer Vault and there haven’t been any major issues so far. I certainly learned a lot and enjoyed working with some team members I haven’t been involved with before. And although it was really stressful and tough at times, the old cliche of breaking down something large into smaller pieces and just working through them is true. Phew!

Update:

Kristen, the Balancer COO, posted a tweet about Impostor Syndrome from Just Kan that I thought was pretty pertinent.

“You will always feel like you are drowning. Even when you are succeeding, it feels like you are drowning because you are constantly being forced to do something new that you haven’t had experience in. While figuring this stuff out on the fly, you’re going to feel like you’re failing and that you’re an impostor.”

Photo by Ava Sol on Unsplash

Etherscan API

Etherscan is a really useful website but fairly recently I discovered they also have a pretty handy Developer API. I used it to analyse gas a contract was using over a period of time and thought it might be useful to record.

Getting Started

First of all an API key is required and this can be created for free by logging in and going to: https://etherscan.io/myapikey.

I’m going to paste my code with comments which should be easy enough to follow. The API covers a whole lot of other end point such as Logs, Tokens, etc that I didn’t use but the docs are good and worth a scan.

Example

Photo by Markus Spiske on Unsplash

Buidler, Waffle & Ethers

Lately at Balancer we’ve moved from the Truffle development environment to using Buidler, Waffle and Ethers. The main benefit is being able to use console.log in Solidity during debugging – it’s amazing how much of a difference this makes and for this alone the change over is worth it. Here’s some notes I made during the switch over.

Ethers

The ethers.js library aims to be a complete and compact library for interacting with the Ethereum Blockchain and its ecosystem.

Documentation is here: https://docs.ethers.io and this Web3.js vs Ethers.js guide was useful.

The following gist demonstrates some basic usage of Ethers that creates an instance of a deployed contract and then running some calls against it:

Buidler & Waffle

Buidler is described as a ‘task runner’. I think its easiest to see it as a swap for Truffle/Ganache. It has lots of different plugins that make it really useful and its documentation was refreshingly good.

The Quickstart shows you how to install and how to run common tasks. It also uses Waffle for testing. Waffle is a simple smart contract testing library built on top of Ethers.js. Tests in Waffle are written using Mocha alongside with Chai and from my experience everything just worked. The docs are here. And its worth digging in to see some of the useful things it offers such as Chai Matchers which allow you to test things like reverts, events, etc.

Buidler commands I found I used a lot:

  • Run the local Buidler EVM: $ npx buidler node
  • Compile project contracts: $ npx buidler compile
  • Run tests: $ npx buidler test ./test/testfile.ts

Here’s an example test file I used that demonstrates a few useful things:

Static Calls

let poolAddr = await factory.callStatic.newBPool(); – The contract callStatic pretends that a call is not state-changing and returns the result. This does not actually change any state and is free.

Connecting Different Accounts

await _pools[1].connect(newUserSigner).approve(PROXY, MAX); – Using contract connect(signer) calls the contract via the signer specified.

Gas Costs

await proxy.connect(newUserSigner).exitswapExternAmountOut(
            _POOLS[1],
            MKR,
            amountOut,
            startingBptBalance,
            {
              gasPrice: 0
            }
        );

Setting the gasPrice to 0 like above allows me to run the transaction without spending any Eth on it. This was useful when checking Eth balance changes without having to worry about gas costs.

Custom accounts & balances

const config: BuidlerConfig = {
  solc: {
    version: "0.5.12",
    optimizer: {
      enabled: true,
      runs: 200,
    },
  },
  networks: {
    buidlerevm: {
      blockGasLimit: 20000000,
      accounts: [
        { privateKey: '0xPrefixedPrivateKey1', balance: '1000000000000000000000000000000' },
        { privateKey: '0xPrefixedPrivateKey2', balance: '1000000000000000000000000000000' }
      ]
    },
  },
};

I needed the test accounts to have more than the 1000Eth balance set by default. In buidler.config.ts you can add accounts with custom balances like above.

Deploying

Deploying is done using scripts. First I updated my buidler.config.ts with the account/key for Kovan that will be used to deploy (i.e. must have Eth):

const config: BuidlerConfig = {
  solc: {
    version: "0.5.12",
    optimizer: {
      enabled: true,
      runs: 200,
    },
  },
  networks: {
    buidlerevm: {
      blockGasLimit: 20000000,
    }
    kovan: {
      url: `https://kovan.infura.io/v3/${process.env.INFURA}`,
      accounts: [`${process.env.KEY}`]
    }
  },
};

Then I wrote a deploy-script.js:

async function main() {
  // We get the contract to deploy
  const ExchangeProxy = await ethers.getContractFactory("ExchangeProxy");
  const WETH = '0xd0A1E359811322d97991E03f863a0C30C2cF029C';
  const exchangeProxy = await ExchangeProxy.deploy(WETH);

  await exchangeProxy.deployed();

  console.log("Proxy deployed to:", exchangeProxy.address);
}

main()
  .then(() => process.exit(0))
  .catch(error => {
    console.error(error);
    process.exit(1);
  });

Then run this using: npx buidler run --network kovan deploy-script.js

🎉 Console Logging 🎉

One of the holy grails of Solidity development and so easy to setup in this case! There are also Solidity stack traces and error messages but unfortunately there was a bug that caused this not to work for our contracts.

To get this going all you need to do is add: import "@nomiclabs/buidler/console.sol"; at the top of your contract then use console.log. More details on what kind of outputs, etc it supports are here. Lifesaver!

Hope some of this was helpful and you enjoy using it as much as me.

(Photo by Kevin Jarrett on Unsplash)

🤓 Geeking Out On Uniswap 🦄

Uniswap is a simple smart contract interface for swapping ERC20 tokens and in general it’s pretty awesome. The story behind it is really inspirational to me and just recently Hayden Adams tweeted that $10million of liquidity was added in a 24 hour period – surely pretty succesful by any measure!

Some of the features of Uniswap include:

  • Supplies on-chain liquidity to other smart contracts
  • Ease of use
  • Gas efficiency (10x less than Bancor)
  • Decentralised/censorship resistant

And just as a reminder:

Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market at a price reflecting its intrinsic value.

Investopedia

Each Uniswap pool holds Eth and another token and trades are exectuted against these reserves.

By supplying tokens to the pooled reserve (being a liquidity provider) you get a proportional share of transaction fees via a liquidity token.

Prices are set automatically using eqn: x * y = k or in terms of tokens: eth_pool * token_pool = invariant.

The invariant is constant during trades but DOES change when liquidity is added or removed from pool. (So not really an invariant?!)

Liquidity Tokens

Liquidity tokens are minted to track the relative proportion of total reserves that each liquidity provider has supplied.

Fees are taken during a token swap and are added to the liquidity reserves. Since total reserves are increased without adding any additional share tokens, this increases that value of all liquidity tokens equally. This functions as a payout to liquidity providers that can be collected by burning shares. (It’s also the reason that the invariant increases at the end of every trade)

When a liquidity provider joins the pool the amount of liquidity tokens minted are calcualted by:

(Initial pool liquidity is equal to initial Eth value provided)
total_liquidity = self.totalSupply
eth_reserve = self.balance - msg.value
liquidity_minted = msg.value * total_liquidity / eth_reserve

Liqudity tokens can be burned at any time to return a proportional share of the markets liquidity to the provider:

removeLiquidity(amount...):

total_liquidity = self.totalSupply
token_reserve = self.token.balanceOf(self)
eth_amount = amount * self.balance / total_liquidity
token_amount = amount * token_reserve / total_liquidity

self.balances[msg.sender] -= amount
self.totalSupply = total_liquidity - amount
send(msg.sender, eth_amount)
return eth_amount, token_amount

Exchanging

Eth -> Token: Traders Eth is added to pool and Token is removed. So Eth amount increases, token amount decreases. Token becomes more expensive.

Token -> Eth: Traders Token is added to pool and Eth is removed. So Eth amount decreases, token amound decreases. Eth becomes more expensive.

Arbitrage

Arbitrage seems to be the key to so many DeFi applications! I think the following is nice description of what it is:

Arbitrage trading is a strategy that can be best understood as a trader that takes advantage of the price differential that exists between two markets. In the case of cryptocurrency, this price differential can be found in the differences in price of a digital asset between cryptocurrency exchanges. If a trader identified an opportunity for arbitrage trading, then they would purchase a digital asset in one exchange, and then sell it on another cryptocurrency exchange.

Mycryptopedia

To me it’s all about icentives – basically in the form of greed! There’s always someone looking to make money from an opportunity. In this case they execute a trade to make a profit but by making they trade they change the price which basically corrects it to the market price – that’s cool!

For example:

  • the global price of ETH-USD moves enough away from the pool price, an arbitrage opportunity exists and is corrected
  • When the initial liquidity is provided the exchange rate is set. If the ratio of liquidity provided isn’t realistic arbitrage traders will correct at the expense of initial liquidity provider.

Some Examples With Numbers

Invariant is set on initial deposit to a new pool. For example 10 ETH and 500 FUN are deposited into new ETH/FUN pool. Invariant is set to:

ETH_pool * FUN_pool = invariant
10 * 500 = 5000

Now for an ETH -> FUN trade:

Buyer sends 1ETH

Fee = 1 ETH / 400 = 0.0025 ETH (0.25% fee)

ETH_pool = 10 + 1 - 0.0025 = 10.9975

FUN_pool = 5000/10.9975 = 454.65 (invariant/ETH_pool)

Buyer receives: 500 - 454.65 = 45.35 FUN

Fee is added back to pool:

ETH_pool = 10.9975 + 0.0025 = 11

FUN_pool = 454.65

New invariant = 11 * 454.65 = 5001.15

Executed price = 45.35 FUN/ETH

But now price has changed:

Fee = 0.0025 ETH
ETH_pool = 11.9975
FUN_pool = 5001.15/11.9975 = 416.85
Buyer receives: 454.65 - 416.85 = 37.8

Executed price = 37.8 FUN/ETH

Price Slippage

Price slippage refers to the difference between the expected price before a transaction is executed and the actual price at which it is executed.

Bancor Support

Easiest for me to think of spot price and actual price.

A trade that is large relative to the size of the total size of the liquidity pool will cause price slippage.

Same example as above: 
ETH_pool * FUN_pool = invariant
10 * 500 = 5000

Spot price for ETH -> FUN = 500/10 = 50

1ETH Purchase: Executed price = 45.35 FUN/ETH

10ETH Purchase: Executed price = 24.969 FUN/ETH

Fee = 10 ETH / 400 = 0.025 ETH (0.25% fee)

ETH_pool = 10 + 10 - 0.025 = 19.975

FUN_pool = 5000/19.975 = 250.31

Buyer receives: 500 - 250.31 = 249.69 FUN

Fee is added back to pool:

ETH_pool = 19.975 + 0.025 = 20

FUN_pool = 250.31

New invariant = 20 * 250.31 = 5006.2

Executed price = 24.969 FUN/ETH

Final Thought

I found this comment from Vitalik on this EthResearch post interesting:

The point is not for this kind of exchange to be the only exchange; the point is for it to be one type among many. It offers the benefits of executing a complete trade in one transaction, and extreme user-friendliness even to smart contracts, which are very real benefits and will at least sometimes exceed the costs of slippage to some users. I am ok with just accepting that this kind of approach will not be acceptable to whales who want to liquidate large amounts of things; that’s not the target market.

(A lot of this stuff came from the Uniswap White paper. Photo by James Lee on Unsplash)

Solidity – How To Estimate Gas Costs

I’ve been working on optimizing the gas cost for deploying a smart contract. Turns out truffle has some pretty useful ways of estimating gas used.

Good Old Migrate

The most obvious way is to just run $ truffle migrate and see what the output says. When the project has quite a large build this can take some time so it’s not that efficient for seeing the difference some code changes make. I do find it useful to run this every now and again though just to confirm the estimates are correct.

estimateGas()

The other way I found useful is to use the estimateGas function. As is pretty self explanatory it is just an estimate and could change depending on the contract state. I found this was nice and quick to use on a truffle cli and I found two useful estimations to look at:

Contract deployment

Start the local ganache with a large gas limit:

$ ganache-cli --gasLimit 10000000 --allowUnlimitedContractSize

Start a truffle cli that connects to above chain:

$ truffle console

Estimate gas for deploying your contract:

truffle(develop)> YourContract.new.estimateGas()

Calling Contract Method

Start with the same set-up steps as above. Then:

truffle(develop)>  YourContract.testMethod.estimateGas()

And that’s it – another useful trick!

Migrating SAI to DAI

I was using Dharma.io to earn interest on my SAI (formerly DAI). I found Dharma really nice to use and originally offered a good interest rate. Recently the rate had become less competitive and I was getting concerned (maybe unneccesarily?) about the lack of comms about migrating the SAI to DAI so I decided to take matters into my own hands especially now that the DAI Savings Rate has kicked in.

When I swapped I was getting 3.22% for SAI on Dharma.io. The DAI savings rate is 4% and looks like it might get raised to 6% soon so definitely worth the swap.

  1. Visit https://migrate.makerdao.com/
  2. Unlock SAI. This calls the approve function for the token. (Nice explanation here.)
  3. This had a gas cost of 0.002637ETH, $0.35.
  4. That was it – once I checked my account I could see DAI.
  5. Not to earn some interest.
  6. Click earn savings. This navigates to https://oasis.app/save.
  7. Deploy Proxy – Setting up your proxy will bundle multiple transactions into one, saving transaction time and gas costs. This only has to be done once.
  8. Gas cost: 0.007344ETH, $0.97
  9. Now wait for 10 confirmations.
  10. Approve Oasis for DAI.
  11. 0.00055ETH, $0.07
  12. Finally deposit the DAI.
  13. 0.002713ETH, $0.36

Total cost $1.75. And now it’s quite satisfying to watch my depost earn interest in real time!

(Photo by Fabian Blank on Unsplash)

🎉✨🔥 Winner Winner! 🔥✨🎉

Well this is cool – I won the Gitcoin x Aave Hackathon!

My entry was a bot that does arbitrage between two Uniswap exchanges using an Aave Flashloan as the capital for initial trade. The Aave judges were “super impressed” with my work and I got a special mention for the way I overcame a testnet problem by forking UniSwap and customising the code to allow two trading between two exchanges with the same token.

Happy days!