Concept

To facilitate a swap, an arbitrary Ethereum or Polygon account, called the maker, defines the swap through compiling a list of assets to sell (the maker side) and compiling a list of assets they want to buy in exchange (the taker side).

During swap creation, the assets on the maker side are optionally transfered from the maker to the DEX and are opened for exchange with another account, called the taker.

The contract resides on the Ethereum and Polygon main networks and is governed by a multisig account on each network to facilitate maintanace operations, e.g., fee structure changes, DEX shut downs and resumption in emergency situations.

Define swaps and offer them for trade

Swaps are created (or opened) by a maker account, which can be an arbitrary Ethereum account. Each swap consists of two sides, the maker side and the taker side. Each side represents a list of assets where each asset can be one of:

• ERC1155 (Batch)

• ERC721

• ERC20

• Ether

In the DEX, an asset is described by the following values:

1. assetType (uint8) - integer describing the type of the asset:

   0 = ERC1155, 1 = ERC721, 2 = ERC20, 3 = Ether.

2. tokenAddress (address) denoting the Ethereum or Polygon address of the asset token, for example: “0xcB8d1260F9c92A3A545d409466280fFdD7AF7042”.

   For Ether, the tokenAddress field is ignored.

3. tokenIDs (uint256[]) denoting an array of token ids for ERC1155 and ERC721.

   For ERC1155s, multiple values can be provided indicating a batch transfer.

   For ERC721s, the tokenIds array holds one and only one value.

   For ERC20s and Ether, the tokenIds field is ignored.

4. amounts (uint256[]) denoting an array of amounts.

   For ERC1155s, multiple values can be provided, indicating a batch transfer. In this case, the size of the amounts array has to match the size of the tokenIds array.

   For ERC20s, the amounts array holds one and only one value.

   For ERC721s and Ether, the amounts array is ignored.

Examples:

• Trade an ERC721 for an ERC20

  Make:

  assetType	tokenAddress	tokenIds	amounts
  1	0x2Fb704d243cFA179fFaD4D87AcB1D36bcf243a44	[123]	[]

  Take:

  assetType	tokenAddress	tokenIds	amounts
  2	0xcB8d1260F9c92A3A545d409466280fFdD7AF7042	[]	[10]

• Trade an ERC20 for Ether

  Make:

  assetType	tokenAddress	tokenIds	amounts
  2	0xcB8d1260F9c92A3A545d409466280fFdD7AF7042	[]	[10]

  Take:

  assetType	tokenAddress	tokenIds	amounts
  3	0x0000000000000000000000000000000000000000	[]	[1]

• Trade a bundle of ERC1155 batch and ERC721 for Ether

  Make:

  assetType	tokenAddress	tokenIds	amounts
  0	0xFe9231f0e6753a8412a00eC1f0028A24d5220Ba9	[1, 2, 3]	[5, 4, 3]
  1	0x2Fb704d243cFA179fFaD4D87AcB1D36bcf243a44	[5]	[]

  Take:

  assetType	tokenAddress	tokenIds	amounts
  3	0x0000000000000000000000000000000000000000	[]	[3]

Whitelisting

When opening a swap with makeSwap, a whitelist can be passed which contains a list of addresses that are exclusively permitted to take the swap.

Taking swaps

A swaps can be executed by a taker account that is in possession of the funds that have been asked for by the swap maker. If a whitelist is provided at the time of makeSwap, then only accounts from the whitelist will be able to take the swap.

Cancelling swaps

Open swaps can be cancelled anytime by the maker of the swap, and by providing a swap id.

Custodial and non-custodial swaps

The DEX allows to open a swap as, 1) custodial swap, and 2) non-custodial swap. The swap maker defines which type is used.

A custodial swap requires the swap maker to have all maker assets available during the makeSwap transaction. The DEX contract takes custody of all maker assets to guarantee that they are available when the swap is taken.

A non-custodial swap also requires the swap maker to have all maker assets available, however, the assets are not transfered into the DEX contract, but they remain in the swap maker’s wallet. This does not include Ether assets, instead they are transfered into the DEX similar to custodial swaps, because the Ether funds cannot be transfered from the makers wallet during takeSwap. When the swap is taken, all token assets have to be available again on the maker side, otherwise the takeSwap transaction will be rejected.

Swap expiration

A swap may be opened using an expiration parameter > 0 to indicate at which block the swap expires. Once a swap expires, it can no longer be executed by a taker. At the same time, the swap is not cancelled automatically when it expires. Instead, it has to be cancelled explicitly by the swap maker.

Modifying swaps

The Ether component of a swap can be modified using the amendSwapEther function, which is much more cost-effective than cancelling and re-opening a swap.

Ether balances

A user can freely deposit and withdraw Ether funds to and from the DEX, as long at the balance allows for it. The Ether balance of a user in the DEX can be used to account for required funds during swapMake and swapTake. For example, 1) user deposits 1 Ether into the DEX, and 2) user creates a swap with 1 Ether on the maker side. In that case, user would not have to send Ether funds during the makeSwap transaction. If user does, however, then the additional funds will be added to the users’s DEX Ether balance, and the balance can be withdrawn at any time.

Fees

The DEX charges swap fees that are fully covered by the taker in Wei of Ether when the swap is executed.

A flat fee is defined that is the same for every trade on the DEX.

Fee discounts

The DEX provides fee discounts for holders of $NFT tokens, tradable on Uniswap.

In particular, if a taker has a balance of NFT.org tokens at a low threshold (e.g., 10,000 tokens), then the DEX will provide a 10% discount on the fees.

If a taker has a balance of NFT.org tokens at a high threshold (e.g., 100,000 tokens), then the DEX will bypass the fees entirely.

Governance

The DEX has a multisig administrator account that is able to perform the following governance tasks:

1. Halt and resume the DEX in case of an emergency.

2. Deprecate the DEX in case a new contract version is published. A deprecated DEX does not allow to open new swaps, however, swaps can still be modified, canceled, and taken. Ether deposits and withdrawals also remain intact.

3. Update the fee structure.

4. Withdraw the fees from the DEX that were accumulated from the swap trades.