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Decentralized Exchange (DEX) like Uniswap v1

Introduction

This project aims to guide developers in building a decentralized exchange (DEX) reminiscent of Uniswap v1. The DEX facilitates the exchange of Ethereum (ETH) with a custom ERC-20 token. The implementation includes key features such as token swapping, liquidity provision, a fee on swaps, and the ability for Liquidity Providers (LPs) to redeem their tokens for ETH and the custom token.

Build Process

1. Hardhat Setup:

  • Created a new project folder and configured a Hardhat environment.
  • Installed necessary dependencies, including Hardhat, Hardhat Toolbox, OpenZeppelin contracts.

2. ERC-20 Token Contract:

  • Developed an ERC-20 Token contract (Token.sol) representing the custom token for swapping.
  • The ERC-20 contract includes basic functionalities, such as minting initial tokens to the contract creator.

3. Exchange Contract:

  • Implemented an Exchange contract (Exchange.sol) responsible for managing token swaps, liquidity provision, and LP token handling.
  • Features of the Exchange contract include:
    • ETH <> TOKEN swapping with a 1% fee on transactions.
    • LP token issuance to users providing liquidity.
    • LP token redemption, allowing users to burn tokens and receive back ETH and TOKEN.

4. Deployment:

  • Developed a deployment script (deploy.js) to deploy both the ERC-20 Token and Exchange contracts using the Hardhat framework.
  • Verified the deployed contracts on Etherscan to ensure transparency and reliability.

5. Testing on Etherscan:

  • Interacted with the deployed contracts on the Sepolia Testnet through Etherscan.
  • Conducted various tests, including adding liquidity, swapping ETH to TOKEN, TOKEN to ETH, and LP token redemption.
  • Verified that the contracts functioned as expected and provided the intended decentralized exchange experience.