GitHub - codingirldev/AMM

🚀 Solana AMM (Automated Market Maker)

A production-ready decentralized exchange (DEX) built on Solana blockchain featuring support for both SPL Token and Token-2022 standards. This AMM implements the battle-tested constant product formula (x×y=k) with configurable fees, comprehensive security features, and a modern Next.js frontend.

✨ Key Features

🔄 Dual Token Standard Support - Compatible with SPL Token and Token-2022
📊 Constant Product Formula - Proven x×y=k mathematical model for price discovery
⚙️ Configurable Fees - Flexible basis points system (0-10000 BP)
🛡️ Slippage Protection - User-defined minimum output validation
🔐 Security First - Program Derived Addresses and checked arithmetic
🎨 Modern Frontend - React-based UI with wallet integration
🧪 Comprehensive Testing - Full test coverage for all operations

🏗️ System Architecture

Core Components

Component	Description
Pool	Main state account storing token mints, vaults, and configuration
LP Mint	ERC20-like tokens representing liquidity provider ownership
Token Vaults	Associated token accounts holding the actual token reserves

Program Derived Addresses (PDAs)

// Pool account derivation
Pool PDA: ["pool", token_a_mint, token_b_mint]

// LP mint derivation  
LP Mint PDA: ["lp_mint", pool_account_key]

Available Instructions

🏁 Initialize Pool - Create new token trading pairs
💧 Add Liquidity - Deposit tokens and receive LP tokens
💸 Remove Liquidity - Burn LP tokens to withdraw underlying assets
🔄 Swap A→B - Exchange token A for token B with fee
🔄 Swap B→A - Exchange token B for token A with fee

🚀 Getting Started

Prerequisites

Ensure you have the following installed:

Node.js v18 or higher
Rust and Anchor CLI v0.31.1
Solana CLI v1.18+
pnpm package manager

Installation & Setup

# Clone the repository
git clone https://github.com/Shradhesh71/AMM.git
cd AMM

# Install dependencies
pnpm install

# Build the Anchor program
pnpm anchor-build

# Generate program types
pnpm anchor build

# Run comprehensive tests
pnpm anchor-test

Local Development Environment

# Terminal 1: Start Solana test validator
solana-test-validator

# Terminal 2: Deploy program locally
pnpm anchor deploy

# Terminal 3: Start the frontend development server
pnpm dev

The frontend will be available at http://localhost:3000

📊 AMM Mathematics

Liquidity Provision Formulas

Initial Liquidity (Bootstrap):

LP_tokens = √(amount_a × amount_b)

Subsequent Liquidity (Proportional):

LP_tokens = min(
  (amount_a × current_lp_supply) / reserve_a,
  (amount_b × current_lp_supply) / reserve_b
)

Trading Formulas

Constant Product Invariant:

reserve_a × reserve_b = k (constant before and after trade)

Swap Output Calculation:

amount_in_after_fee = amount_in × (10000 - fee_rate) / 10000
amount_out = (reserve_out × amount_in_after_fee) / (reserve_in + amount_in_after_fee)

🧪 Testing & Quality Assurance

Test Coverage

✅ Pool Initialization - Both SPL Token and Token-2022 pools
✅ Liquidity Management - Add/remove operations with proper LP calculations
✅ Token Swapping - Bidirectional swaps with fee validation
✅ Security Checks - PDA validation, slippage protection, arithmetic safety
✅ Edge Cases - Zero amounts, insufficient liquidity, overflow protection

Running Tests

# Run all tests with coverage
pnpm anchor-test

# Run tests with detailed output
cd anchor && anchor test --skip-lint --verbose

# Run specific test suite
cd anchor && anchor test --skip-lint --grep "AMM"

🚀 Deployment Guide

Devnet Deployment

# Set cluster to devnet
anchor config set --provider.cluster devnet

# Ensure you have devnet SOL
solana airdrop 2 --url devnet

# Deploy to devnet
anchor deploy --provider.cluster devnet

⚙️ Configuration Options

Fee Structure

pub struct Pool {
    pub fee_rate: u16, // Basis points (100 = 1%, 10000 = 100%)
    // ... other fields
}

Recommended Fee Ranges:

Low-volume pairs: 300 BP (3%)
Stablecoin pairs: 25-50 BP (0.25%-0.5%)
Volatile pairs: 100-300 BP (1%-3%)

🛡️ Security Features

Feature	Implementation
PDA Security	All accounts use cryptographically secure Program Derived Addresses
Arithmetic Safety	Checked operations prevent integer overflow/underflow
Access Control	Proper authority validation for all sensitive operations
Slippage Protection	User-defined minimum output amounts prevent MEV attacks
State Validation	Comprehensive pool state and balance checks

📁 Project Structure

anchor-AMM/
├── anchor/                           # Solana program
│   ├── programs/amm/src/
│   │   ├── lib.rs                   # Program entry point
│   │   ├── states.rs                # Pool state definition
│   │   ├── errors.rs                # Custom error types
│   │   └── instructions/            # Instruction handlers
│   │       ├── initialize_pool.rs   # Pool creation logic
│   │       ├── add_liquidity.rs     # Liquidity provision
│   │       ├── remove_liquidity.rs  # Liquidity withdrawal
│   │       ├── swap.rs              # Token swapping logic
│   │       └── helper.rs            # Utility functions
│   └── tests/                       # Comprehensive test suite
├── src/                             # Next.js frontend
│   ├── app/                         # App router (Next.js 14)
│   ├── components/                  # React components
│   │   ├── ui/                      # Reusable UI components
│   │   ├── solana/                  # Solana-specific components
│   │   └── amm/                     # AMM-specific components
│   └── lib/                         # Utility functions
├── public/                          # Static assets
└── package.json                     # Dependencies and scripts

🤝 Contributing

We welcome contributions! Please follow these steps:

Fork the repository
Create a feature branch (git checkout -b feature/amazing-feature)
Commit your changes (git commit -m 'Add amazing feature')
Push to the branch (git push origin feature/amazing-feature)
Open a Pull Request

Please ensure all tests pass and follow the existing code style.

📄 License

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