How to market make and transact with Hashflow

There was an increase within the quantity of DeFi merchants lately which has resulted in additional decentralized exchanges (DEXs) being delivered to the market as effectively.

Web3 is rising 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 approach 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, despite the fact that the transaction particulars are saved on the blockchain.

We’ve got numerous DEX platforms available on the market, like Coinbase and Binance, however on this article, we are going to give attention to Hashflow.

We’ll take a look at how merchants are linked with pinpoints through a Hashflow token, the way it works in another way from others, easy methods to market make, and easy methods to commerce.

What’s Hashflow and what’s its aim?

Initially, Hashflow is understood for its bridge-less cross-chain swaps, which suggests it’s extremely interoperable, has zero slippage, and has no MEV.

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

Liquidity suppliers and merchants are linked with skilled market makers on Hashflow and its core options provide higher flexibility for its market makers — no slippage, MEV-resistant, higher worth quotes, and a less expensive buying and selling payment 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 worth 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 belongings 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 the very best costs due to its optimized fuel payment 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 known as the HFT (Hashflow token), which is an ERC-20 on the Ethereum chain deployed on December 22, 2021. With one billion items of HFT in provide, Hashflow distributed this cryptocurrency on this method: 19% to the core group; 25% to the early traders; and 56% to the ecosystem. An additional 6.75% will likely be given to early customers as a reward.

The Hashflow NFT, which can also be known 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 may have an HFT worth. And Hashflow states that after 4 years, 5% of HFT will likely be issued to the neighborhood.

How you can market make

Market markers are basically vital in Hashflow and available in the market as an entire. They’re the liquidity suppliers that make the market purposeful by shopping for and promoting belongings. This doesn’t imply that they will purchase and promote at any time straight away, however they’re at all times on standby, prepared to purchase and promote.

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

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

To market make on Hashflow, we are going to observe the steps beneath. Integrating with Hashflow as a market maker is kind of easy.

Hook up with WebSocket

You’ll need to connect with the WebSocket from Hashflow API simply as you see on line 10 beneath, and it’s possible you’ll must 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;

operate 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('knowledge', (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 linked to you, as seen within the following:

// TODO: Exchange this along with your market maker identify (as soon as added to the backend)
const MARKET_MAKER_NAME = 'TestMM';
// TODO: Set true if you wish to MM on 1inch, and so forth – 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 check with this pattern codebase to see how to connect with the WebSocket from Hashflow.

Create a Pool

You’ll need to connect with your pockets after connecting to the WebServer to create a Pool that can provide quotes.

To do that, head over utilizing this link and fill in your Pool identify, signer handle, and eventually establish if you need 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 once they wish to commerce to our server which then provides the information to the required market maker:

{
  "messageType": "rfq",
  "message": {
    // It is a distinctive RFQ ID -- it is advisable 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 handle
    "baseTokenName": string,  // token identify (e.g. USDC, ETH, ...)
    "baseTokenNumDecimals": quantity,  // token decimals (e.g. DAI: 18, USDC: 6)

    // Quote token (the token the dealer buys).
    "quoteToken": string,  // contract handle
    "quoteTokenName": string,  // token identify (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 crammed by the quote.
    // If quoteTokenAmount is current, baseTokenAmount must be crammed by the quore.
    // Quantities are in decimals, e.g. "1000000" for 1 USDT.
    "baseTokenAmount": ?string,
    "quoteTokenAmount": ?string,

    // The dealer pockets handle that can swap with the contract. This could be a proxy
    // contract (e.g. 1inch)
    "dealer": string,

    // The pockets handle of the particular dealer (e.g. finish consumer pockets for 1inch).
    // That is useful so as to perceive consumer conduct.
    // If effectiveTrader will not be current, you'll be able to assume that dealer == effectiveTrader.
    "effectiveTrader": ?string,
  }
}

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

{
  "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 handle of the pool.

    // That is elective. If utilizing an EOA (externally owned account), this could 
    // include the pockets handle 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,
  }
}

Help signing quotes

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

When the very 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 also 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 inner to hashflow contracts.
      // It's leveraged to mitigate quote replay.
      "nonce": quantity
    }
  }
}

Get the primary signed RFQ

You’ll be able to 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 vary this
}

When you get a response, then your market maker is ready. You also needs to check with 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 points of Hashflow — particularly, that it gives 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 assist for different chains as that is at present underneath mass adoption. To additionally view its metric, head over to this dashboard.