The right way to market make and transact with Hashflow

There was an increase within the quantity of DeFi merchants in recent times which has resulted in additional decentralized exchanges (DEXs) being dropped at the market as properly.

Web3 is growing its influence on main industries, and the buying and selling trade is not any exception. We had seen the deficiencies in centralized exchanges like an absence of transparency, insecurity, monetary exclusiveness, and privateness, and this has supplied the necessity for DEXs.

DEX is a method of exchanging cryptocurrencies with none middleman like brokers or third events. They observe a special method from centralized exchanges by counting on good contracts to deal with transactions peer-to-peer.

The enterprise mannequin focuses on privateness for its customers the place transactions are carried out anonymously, although the transaction particulars are saved on the blockchain.

We’ve quite a lot of DEX platforms in the marketplace, like Coinbase and Binance, however on this article, we’ll deal with Hashflow.

We’ll have a look at how merchants are related with pinpoints through a Hashflow token, the way it works in a different way from others, the right way to market make, and the right way to commerce.

What’s Hashflow and what’s its objective?

To begin with, Hashflow is thought for its bridge-less cross-chain swaps, which implies it’s extremely interoperable, has zero slippage, and has no MEV.

That is potential as a result of Hashflow ensures market makers signal the worth quotes so it stays unchanged in the course of the commerce.

Liquidity suppliers and merchants are related with skilled market makers on Hashflow and its core options provide higher flexibility for its market makers — no slippage, MEV-resistant, higher value quotes, and a less expensive buying and selling price are all benefits of it.

All of the above talked about are solely potential due to the structure Hashflow makes use of, which is the Pool-based structure.

How Hashflow works

Beginning with a transaction, the consumer has to attach his pockets to Hashflow, enter a quantity they wish to commerce, after which a quote is exhibited to them.

If the consumer accepts, the order is submitted and that transaction is verified and added to the Hashflow community (or blockchain). On the opposite finish, there are maker markets that cope with the issuing of value quotes that the consumer had already accepted.

The market maker then indicators the commerce and it’s executed with out slippage (no matter order was submitted by the consumer stands). In contrast to different DEXs, which do normally have AMMs (Automated Market Maker) that handles market making and property pricing on-chain utilizing Lazy Liquidity Provision, Hashflow goes historically similar to the order-book mechanism.

The pricing is finished off-chain however the commerce is executed on-chain.

Hashflow was in 2021 and has grown considerably, providing one of the best costs due to its optimized gasoline price and nil slippage. As of the time of this text being printed, Hashflow at present helps bridge-less cross-chain swaps which makes you provoke a swap on EVM-compatible chains, and it’s anticipated to incorporate Solana integration, good order Routing, gasless buying and selling, restrict orders, and Hashverse in future.

In abstract, Hashflow is a DeFi protocol that serves as a decentralized alternate working on the Ethereum blockchain.

Hashflow tokens

Hashflow gives its token referred to as the HFT (Hashflow token), which is an ERC-20 on the Ethereum chain deployed on December 22, 2021. With one billion models of HFT in provide, Hashflow distributed this cryptocurrency on this method: 19% to the core group; 25% to the early buyers; and 56% to the ecosystem. An extra 6.75% will likely be given to early customers as a reward.

The Hashflow NFT, which can be referred to as the Hashbots, will likely be used within the Hashverse that will likely be launched sooner or later. NFT holders will obtain HFT that tallies to the worth of the NFT, as a result of every NFT can have an HFT worth. And Hashflow states that after 4 years, 5% of HFT will likely be issued to the group.

The right way to market make

Market markers are primarily essential in Hashflow and available in the market as a complete. They’re the liquidity suppliers that make the market purposeful by shopping for and promoting property. This doesn’t imply that they will purchase and promote at any time straight away, however they’re all the time on standby, prepared to purchase and promote.

In most decentralized exchanges, the market makers are automated and good contracts are deployed to seek out market pairs in AMMs (Automated Market Makers) however they’re vulnerable to assaults and in addition a bit laggy as a result of the worth quotes are dealt with on-chain.

In Hashflow, the market makers are companies, establishments, or people which might be given the privilege to make these market choices utilizing their professionalism, and that is finished off-chain, which in flip reduces gasoline charges and slippage, as talked about earlier.

To market make on Hashflow, we’ll observe the steps under. Integrating with Hashflow as a market maker is sort of easy.

Hook up with WebSocket

You will want to hook up with the WebSocket from Hashflow API simply as you see on line 10 under, and you could have to contact the group on Telegram or Discord to be added to the “allowlist” makers.

const PING_PONG_INTERVAL_MS = 30000;
const PING_PONG_GRACE_PERIOD_MS = 1000;

perform getWebsocketConnection(
  marketMakerName,
  onMessageCallBack,
  onCloseCallback,
  onHeartbeatCallback,
) {
  const ws = new WebSocket(`${course of.env.HASHFLOW_WS_API}/maker/v1`, {
    headers: { marketmaker: marketMakerName, }
  });
  const heartbeat = () => {
    if (ws.pingTimeout) {
      clearTimeout(ws.pingTimeout);
    }
    ws.pingTimeout = setTimeout(() => {
      ws.terminate();
    }, PING_PONG_INTERVAL_MS + PING_PONG_GRACE_PERIOD_MS);

    onHeartbeatCallback();
  }
  ws.on('open', heartbeat);
  ws.on('ping', heartbeat);
  ws.on('message', message => onMessageCallBack(message));

  ws.on('shut', () => {
    if (ws.pingTimeout) {
      clearTimeout(ws.pingTimeout);
    }
    setTimeout(() => {
      ws.removeAllListeners();
      onCloseCallback();
    }, 5000);
  });

  ws.on('error', err => {});

  ws.on('unexpected-response', (_, res) => {
    let message="";
    res.on('information', (chunk) => {
      message += chunk;
    });
    res.on('finish', () => {
      if (res.statusCode === 401) {
        logger.error(`WS entry not approved. ${message}`);
      } else {
        logger.error(`Unexpexted response from server: [${res.statusCode}] ${message}.`);
      }
      ws.shut()
    });
  });
  return ws;
}

And Hashflow is related to you, as seen within the following:

// TODO: Substitute this along with your market maker title (as soon as added to the backend)
const MARKET_MAKER_NAME = 'TestMM';
// TODO: Set true if you wish to MM on 1inch, and so on – and have signed authorized agreements
const SUPPORT_AGGREGATORS = false;
const levelsInterval = SUPPORT_AGGREGATORS 
  ? setInterval(() => publishPriceLevels(mainSocket), 1000)
  : undefined;
const onMessageCallback = message => processMessage(mainSocket, message);
const onHeartbeatCallback = () => {
  for (const networkId of Object.keys(SUPPORTED_PAIRS)) {
    sendMessage(mainSocket, 'subscribeToTrades', { networkId, pool: POOL });
  }
};
const onCloseCallback = () => {
  if (SUPPORT_AGGREGATORS) {
    clearInterval(levelsInterval);
  }
  mainSocket = connectToHashflow();
};

const connectToHashflow = () => {
  return getWebsocketConnection(
    MARKET_MAKER_NAME,
    onMessageCallback,
    onCloseCallback,
    onHeartbeatCallback,
  );
}
let mainSocket = connectToHashflow();

The ‘TestMM’ is changed with yours after contacting the group. You also needs to seek advice from this pattern codebase to see how to hook up with the WebSocket from Hashflow.

Create a Pool

You will want to hook up with your pockets after connecting to the WebServer to create a Pool that may provide quotes.

To do that, head over utilizing this link and fill in your Pool title, signer tackle, and at last determine in order for you your Pool to be public or personal. After finishing the method, you need to get a web page like this:

Obtain RFQ and reply with a quote

Now to the attention-grabbing half; Hashflow receives a request-for-quote from a consumer after they wish to commerce to our server which then provides the info to the required market maker:

{
  "messageType": "rfq",
  "message": {
    // It is a distinctive RFQ ID -- it's essential to use this when sending again a quote.
    "rfqId": string,

    // This will likely be one thing like: hashflow, 1inch. That is helpful
    // since 1inch cost charges for his or her trades
    "supply": string,

    // 1 for ETH L1
    "networkId": quantity,

    // Base token (the token the dealer sells).
    "baseToken": string,  // contract tackle
    "baseTokenName": string,  // token title (e.g. USDC, ETH, ...)
    "baseTokenNumDecimals": quantity,  // token decimals (e.g. DAI: 18, USDC: 6)

    // Quote token (the token the dealer buys).
    "quoteToken": string,  // contract tackle
    "quoteTokenName": string,  // token title (e.g. USDC, ETH, ...)
    "quoteTokenNumDecimals": quantity,  // token decimals (e.g. DAI: 18, USDC: 6)


    // Precisely one of many following fields will likely be current within the RFQ.
    // If baseTokenAmount is current, quoteTokenAmount must be stuffed by the quote.
    // If quoteTokenAmount is current, baseTokenAmount must be stuffed by the quore.
    // Quantities are in decimals, e.g. "1000000" for 1 USDT.
    "baseTokenAmount": ?string,
    "quoteTokenAmount": ?string,

    // The dealer pockets tackle that may swap with the contract. This is usually a proxy
    // contract (e.g. 1inch)
    "dealer": string,

    // The pockets tackle of the particular dealer (e.g. finish consumer pockets for 1inch).
    // That is useful so as to perceive consumer habits.
    // If effectiveTrader is just not current, you possibly can assume that dealer == effectiveTrader.
    "effectiveTrader": ?string,
  }
}

And based mostly in your applied logic in your codebase, a quote is returned to the consumer on this format as properly:

{
  "messageType": "quote",
  "message": {
    "rfqId": string,  // This ought to be the identical rfqId that was despatched by the server
    "pool": string,  // This ought to be the contract tackle of the pool.

    // That is non-obligatory. If utilizing an EOA (externally owned account), this could 
    // comprise the pockets tackle of the EOA. 
    // The EOA must have allowance set to the Pool.
    "eoa": ?string,

    // Similar as RFQ
    "baseToken": string,
    "quoteToken": string,

    // Quantities are in decimals.
    "baseTokenAmount": string,
    "quoteTokenAmount": string,

    // Set this to "0" for personal pool / EOA buying and selling.
    "charges": string,

    // The unix timestamp when the quote expires, in seconds.
    "quoteExpiry": quantity,
  }
}

Assist signing quotes

This solely occurs if the consumer doesn’t provide a particular market maker, and in that context, Hashflow will make a request for a quote from all market makers and picks one of the best one.

When one of the best quote is picked, we ship a signQuote message kind again to the market maker for them to signal (get a signature from them). The request can be on this format:

  "messageType": "signQuote",
  "message": {
    // The RFQ ID that generated the quote.
    "rfqId": string,
    "networkId": quantity,  // The chain ID (e.g. 1 for Ethereum mainnet)
    "quoteData": {
      "txid": string,  // Distinctive identifier of the quote -- totally different from the RFQ ID.

      "pool": string,
      "eoa": string,

      "baseToken": string,
      "quoteToken": string,

      "baseTokenAmount": string,
      "quoteTokenAmount": string,

      "charges": string,

      "quoteExpiry": quantity,

      // The account that will likely be executing the swap. For 1inch, that is the 1inch proxy.
      "dealer": string,
      // Dealer truly executing the swap, if totally different from 'dealer'.
      "effectiveTrader": ?string,

      // The next parameter is inside to hashflow contracts.
      // It's leveraged to mitigate quote replay.
      "nonce": quantity
    }
  }
}

Get the primary signed RFQ

You may take a look at your WebServer to see if you happen to get a signed RFQ from it by making a request to Hashflow’s staging API with the next physique params as a pattern:

POST https://api-staging.hashflow.com/taker/v1/quote/signedRfq


{
    "networkId": 42,  // 42 is Kovan, 1 is Mainnet
    "supply": "hashflow", 
    "baseToken": "0x07de306ff27a2b630b1141956844eb1552b956b5",  // USDT (Kovan)
    "quoteToken": "0xa0a5ad2296b38bd3e3eb59aaeaf1589e8d9a29a9",  // WBTC (Kovan)
    "dealer": "0x2150DD462B496bd5e4A37b5411c13319427BE83E",
    "baseTokenAmount": "1000000",
    "marketMaker": "TestMM"  // remember to alter this
}

When you get a response, then your market maker is about. You also needs to seek advice from the documentation for extra edge circumstances.

Conclusion

On this article, we targeted on demystifying the connection between Hashflow, its customers, and market makers and the important thing features of Hashflow — specifically, that it provides bridgeless cross-chain swaps and off-chain market choices; i.e., quotes are finished with out automated makers.

Hashflow is bringing the multichain world nearer to us simply as Vitalik of Ethereum had speculated. We hope to get extra Hashflow help for different chains as that is at present below mass adoption. To additionally view its metric, head over to this dashboard.