Otmoic

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Automated Market Maker (AMM) ​

Automated Market Maker (AMM) system in Otmoic aims to provide price bases for cross-chain coin swaps while hedging on centralized exchanges to ensure the stability of assets for liquidity providers (LP Nodes).

AMM Process in Otmoic ​

Quoting Process ​

  1. Receive Quote Request: The system receives a quote request from a client and logs all necessary details.
  2. Query Orderbook: Checks current data from DEXs and centralized exchanges to ensure it's up-to-date.
  3. Balance Verification: Ensures the LP Node has sufficient balance. If not, the request is rejected.
  4. Hedging Check (if enabled): Confirms enough balance and liquidity on the centralized exchange and checks trading limits.
  5. Calculate Average Transaction Price: Uses the top levels of the orderbook to find a weighted average price.
  6. Fee Calculation: Applies a standard 0.3% fee and adjusts if needed to cover trading costs.
  7. Send Final Quote: Provides the adjusted quote back to the client.

Price Locking ​

  1. Verify Parameters: Ensures the quote is processed within the allowed timeframe.
  2. Re-check Balance: Confirms the LP Node's balance is still sufficient.
  3. Lock Balance: Locks the required balance for the transaction.
  4. Authentication: Verifies that the quote was issued by the system.
  5. Market Price Check: Compares the price at the time of quoting and locking. Rejects the request if market changes are too significant.

Transaction Execution ​

  1. TransferOut: Logs the transfer-out operation and sends an event to trigger the LP's next step.
  2. TransferIn: Logs the transfer-in step upon receiving confirmation of the transfer-out.
  3. Confirmation Steps: Ensures each part of the transfer process is complete, submitting hedging orders as needed and recording results.

Hedging Process ​

  1. Hedging Queue: Manages hedging operations sequentially to avoid issues with concurrent actions.
  2. Execution: Processes hedging based on market conditions and logs relevant details like order ID and fees.
  3. Unlock Balance: Updates balance status after hedging is completed to reflect changes promptly.