DiamondSwap SwapMath Library

The DiamondSwap SwapMath Library provides utility functions for calculating the outcomes of token swaps within the DiamondSwap protocol. These functions are essential for determining the exact amount of tokens swapped and the resulting changes in price and liquidity. The library ensures that swaps are executed accurately and efficiently, considering the constraints of the liquidity pool. Below is a detailed breakdown of the functions within the DiamondSwap SwapMath Library.

Functions

computeSwapStep(uint160 sqrtPriceCurrent, uint160 sqrtPriceTarget, uint128 liquidity, int256 amountRemaining, uint24 feePips) → (uint160 sqrtPriceNext, uint256 amountIn, uint256 amountOut, uint256 feeAmount)

This function calculates the results of a single swap step, including the next square root price, the amount of tokens swapped in and out, and the fee charged on the swap. It is used to compute the changes in the pool as a result of a swap.

• sqrtPriceCurrent: The current square root price of the pool, represented as a Q64.96 fixed-point number.
• sqrtPriceTarget: The target square root price for the swap step, representing the price at which the swap will stop or continue to the next step.
• liquidity: The current liquidity in the pool.
• amountRemaining: The remaining amount of tokens to be swapped. This value can be positive (for input trades) or negative (for output trades).
• feePips: The fee rate for the swap, expressed in basis points (e.g., 500 for 0.05% fee).
• Returns: A tuple containing the following:
  • sqrtPriceNext: The next square root price after the swap step, as a uint160.
  • amountIn: The amount of input tokens swapped, as a uint256.
  • amountOut: The amount of output tokens received, as a uint256.
  • feeAmount: The fee charged on the swap, as a uint256.

This function is crucial for accurately simulating the outcome of swaps, ensuring that the correct amounts of tokens are exchanged and fees are applied.

Use Cases

The DiamondSwap SwapMath Library is particularly valuable in scenarios that require precise swap calculations, including:

• Simulating Swaps: The computeSwapStep function allows developers to simulate swaps and predict their outcomes before executing them, ensuring that the swaps meet the desired conditions.
• Price and Liquidity Adjustments: By calculating the next square root price and the amounts of tokens swapped, this library helps maintain accurate pricing and liquidity within the pool during swaps.
• Fee Calculation: The function also calculates the exact fee amount for each swap step, ensuring that the correct fee is charged and distributed to liquidity providers.

Efficient Execution of Swaps

The library is designed to handle the complexities of concentrated liquidity and price ticks, making it ideal for use in DiamondSwap, where liquidity is distributed unevenly across price ranges. By breaking down swaps into steps and calculating the outcomes incrementally, the library ensures that swaps are executed efficiently and without errors.

Conclusion

The DiamondSwap SwapMath Library provides essential utilities for calculating swap outcomes within the DiamondSwap protocol. By using the computeSwapStep function, developers can accurately determine the next price, amounts of tokens swapped, and fees applied during a swap. Whether you're building decentralized finance (DeFi) applications, executing trades, or managing liquidity, this library is a critical tool for ensuring accurate and efficient swaps within the DiamondSwap ecosystem.