OptionAMM

It is a decentralized options trading platform built with Solidity using Foundry and a modern Next.js frontend.

• It is a comprehensive Automated Market Maker (AMM) for options trading that I developed leveraging Foundry and React.
• It consists of multiple sub-components:
  • Smart Contract (OptionAMM): Core options trading contract with liquidity management
  • Frontend Application: Modern Next.js interface for seamless options trading
  • Liquidity Management: Users can provide liquidity and earn profits from options trading
  • Real-time Price Feeds: Integration with Chainlink oracles for accurate price data
• The platform enables users to create and trade both call and put options with customizable parameters including strike price, lot size, premium, and expiry.
• It implements advanced DeFi strategies including:
  • Automated options creation and settlement
  • Dynamic premium calculation with minimum thresholds
  • Liquidity pool management for options backing
  • Real-time ETH/USD price integration via Chainlink
• Supports Ethereum Mainnet and Sepolia testnet with configurable network settings.

Key Features

1. Options Trading

• Call & Put Options: Create and trade both types of options
• Flexible Parameters: Customizable strike price, lot size, premium, and expiry
• Option Settlement: Options can be settled after expiry whenever owner wants based on current market price

2. Liquidity Management

• Liquidity Provision: Users can add USDC liquidity to back options
• Dynamic Management: Add and remove liquidity as needed

3. Real-time Price Integration

• Chainlink Oracles: Reliable ETH/USD price feeds
• Gas Optimized: Price fetching optimized to use view functions (0 gas cost)
• Accurate Settlement: Options settle based on real market prices

Architecture

Smart Contract (dexCode/)

• OptionAMM Contract: Main trading contract handling options creation, trading, and settlement
• IERC20 Integration: USDC token support for premium payments and settlements
• Chainlink Integration: Real-time price feeds for accurate option pricing

Frontend (option-amm-app/)

• Next.js Application: Modern React-based user interface
• Wallet Integration: RainbowKit for seamless wallet connections
• Real-time Updates: Live price feeds and portfolio tracking
• Responsive Design: Mobile-friendly interface

Getting Started

• git: You'll know you did it right if you can run git --version and you see a response like git version x.x.x
• foundry: You'll know you did it right if you can run forge --version and you see a response like forge 0.2.0 (816e00b 2023-03-16T00:05:26.396218Z)
• Node.js: You'll know you did it right if you can run node --version and you see a response like v18.x.x
• npm: You'll know you did it right if you can run npm --version and you see a response like 8.x.x

Installation

• Install OptionAMM

    git clone https://github.com/yug49/OptionAMM
    cd OptionAMM

Smart Contract Setup (dexCode/)

• Navigate to the smart contract directory

    cd dexCode

• Make a .env file

    touch .env

• Open the .env file and fill in the details similar to:

    SEPOLIA_RPC_URL=<YOUR SEPOLIA RPC URL>
    PRIVATE_KEY=<YOUR PRIVATE KEY>
    ETHERSCAN_API_KEY=<YOUR ETHERSCAN API KEY>

• Install dependencies and libraries

    forge install

• Build Smart Contract

    forge build

Frontend Setup (option-amm-app/)

• Navigate to the frontend directory

    cd ../option-amm-app

• Install frontend dependencies

    npm install

• Create frontend environment file

    touch .env.local

• Configure your .env.local file:

    NEXT_PUBLIC_WALLETCONNECT_PROJECT_ID=<YOUR_WALLETCONNECT_PROJECT_ID>
    NEXT_PUBLIC_CONTRACT_ADDRESS=<DEPLOYED_CONTRACT_ADDRESS>

Deployment

Smart Contract Deployment

For Sepolia testnet deployment:

    cd dexCode
    forge script script/DeployOptionAMM.s.sol --rpc-url $SEPOLIA_RPC_URL --private-key $PRIVATE_KEY --etherscan-api-key $ETHERSCAN_API_KEY --broadcast --verify --legacy -vvv

once deployed, grab the deployed contract address of your OptionAMM and replace the previous one in option-amm-app/.env.local

Frontend Deployment

• Build the frontend application:

    cd option-amm-app
    npm run build

• Start the development server:

    npm run dev

• Access the application at http://localhost:3000

Usage

Creating Options

1. Connect Wallet: Use a browser or external wallet to connect with the app
2. Set Parameters: Choose strike price, lot size, premium, and expiry
3. Create Option: Submit transaction to create the option
4. Monitor: Track your created options in the dashboard

Trading Options

1. Browse Options: View available options in the marketplace
2. Purchase Options: Buy options by paying the premium
3. Manage Portfolio: Track your option positions
4. Settlement: Options can be settled after expiry

Providing Liquidity

1. Add Liquidity: Deposit USDC to the liquidity pool
2. Manage Position: Add or remove liquidity as needed

Smart Contract Tests

    cd dexCode
    source .env
    forge test --fork-url $SEPOLIA_RPC_URL

Configuration

Network Setup

• The platform supports Sepolia testnet
• Network configuration is handled in the frontend application
• Update contract addresses in the frontend environment variables

Price Feed Configuration

• Chainlink ETH/USD price feeds are configured in the smart contract
• Supports multiple networks with different price feed addresses
• Automatic price updates in the market info tab after every 30 seconds.

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