@kwenta/synthswap

SynthSwap

Synthswap is a simple utlity contract that combines a 1Inch swap with the Synthetix exchanger enabling low slippage swaps into and out of synths.

See ISynthSwap.sol for the current interface.

Rationale

At the time of writing this there are no single step methods for swapping from any ERC20 to any synth on Optimistic layer 2. The best way for a trader to begin trading on Kwenta is to swap their tokens for sUSD on Uniswap (or 1inch) and then swap their sUSD for their desired synth on Kwenta.

Effectively, Synthswap combines the above process into a singular zap. This enables Kwenta to provide liquidity for swaps like USDT -> sTSLA or sETH -> ETH all within one transaction (excluding approvals) and eventually one interface.

Documentation

In Synthswap.sol there are two core functions: swapInto and swapOutOf. Both these functions take in a data payload that is returned from the 1inch API. This method leverages 1inch's off-chain routing functionality. For swapInto, delegatecall is used to execute the 1inch swap in the context of the EOA.* And for swapOutOf, call is used to execute the 1inch swap in the context of the contract.*

It is also important to note that under the hood 1inch relies on two entrypoint functions in AggregationRouterV3.sol, unoswap for Uniswap like swaps, and swap for everything else. You will see these function selectors in our test payloads as 0x2e95b6c8 and 0x7c025200, respectively.

The remaining parameters are dedicated to routing the Synthetix leg of the swap. The two Synthetix functions used are exchangeWithTrackingForInitiator (see SIP-140 for details) and exchangeWithTracking. The former is used to settle funds with the EOA caller and the latter is used to settle funds within the contract.

*Subject to change with testing.

Prepping Local Development

Install local dependencies:

npm install

Provide ARCHIVE_NODE_URL in .env. Alchemy has free archive nodes:

ARCHIVE_NODE_URL=<YOUR_ARCHIVE_NODE_PROVIDER_HERE>

Deploy to Mainnet Fork

Run a forked network locally:

npm run fork

Deploy Synthswap onto local forked network:

npm run deploy:fork

Running Tests

To run all tests (unit and integration) under /test

npx hardhat test

To run integration tests:

npm run test:integration

To run utils tests:

npm run test:utils