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There are different type of Contracts used in DerpDEX, most of them falls under the below category:
- 1.Factory Contract:
- The Factory contract is responsible for deploying and managing the creation of new instances of trading pairs or liquidity pools.
- It provides a template for creating new pools and ensures standardisation across different trading pairs.
- The Factory contract may also handle the registration and listing of newly created pools.
- 2.Router Contract:
- The Router contract acts as the core routing mechanism within the DEX.
- It facilitates the swapping of tokens between different liquidity pools or trading pairs.
- Users interact with the Router contract to execute trades, allowing them to buy or sell tokens based on specified trade routes.
- 3.Liquidity Pool Contracts:
- Liquidity Pool contracts are where liquidity providers contribute their funds, creating pools of tokens for trading.
- These contracts enable users to add liquidity to the DEX by depositing token pairs in exchange for liquidity provider (LP) tokens.
- Liquidity Pool contracts manage the liquidity ratio and pricing for the tokens within the pool.
- 4.NFT Position Manager Contract:
- The NFT Position Manager contract is commonly used in decentralised exchanges that implement Automated Market Maker (AMM) models, such as Uniswap V3.
- It allows liquidity providers to manage their positions in the liquidity pool as non-fungible tokens (NFTs).
- Liquidity providers can adjust the price range and capital allocation of their positions within the pool using this contract.