> For the complete documentation index, see [llms.txt](https://docs.1layer.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.1layer.io/readme.md).

# 1LAYER DeFi

General description of the 1LAYER protocol.

### Introduction

1LAYER protocol facilitates token swaps and bridging across different blockchain networks. It employs a set of non-upgradable smart contracts to manage liquidity pools, execute swaps, and coordinate cross-chain operations. To perform swaps, third-party swap protocols are used. The system is not limited to any specific kind of swap protocol, and a number of integrations can be extended as much as needed.

### Core Contracts

1. **InterNetworkExecutor**: Manages cross-network token swaps, coordinating with the Gateway for message passing between networks.
2. **IntraNetworkExecutor**: Handles token swaps within the same network.
3. **Gateway**: Facilitates cross-network message passing and token bridging.
4. **Vault**: Manages token deposits, withdrawals, and serves as a liquidity pool for cross-chain operations.

### Key Mechanics

#### Token Swaps

1. **Intra-Network Swaps (swaps within network)**:

   * Executes swap within one network.
   * Users provide token input and desired output.
   * The swap is performed using third-party swap contracts.

   Detailed intra-network swap flow can be found [here](/readme/architechture/flows/swap-flow/intrachain-swap.md).
2. **Inter-Network Swaps (swaps between networks)**:

   * Executes swaps between different networks.
   * It involves a two-step process: a funds bridge on the source network and a swap on the destination network.
   * Uses the Gateway for cross-chain message passing.
   * The swap is performed using third-party swap contracts.

   Detailed inter-network swap flow can be found [here](/readme/architechture/flows/swap-flow/interchain-swap.md).

#### Liquidity Management

* The Vault contract serves as a liquidity pool.
* Users can deposit tokens to receive shares.
* Shares represent a proportional claim on the vault's assets.
* Users can withdraw their assets by burning shares.

Detailed vault flow can be found [here](/readme/architechture/flows/vault-flow.md).

#### Fee Structure

* There are 2 types of fees: LP fee and Protocol fee.
* Protocol fees are collected during both inter-network and intra-network swaps.
* LP fees are collected during the inter-network swaps and transferred to the vault, increasing value of each share in the vault.
* The project can change the percentage for each fee type, but the value cannot be higher than 3% each.

#### Cross-Chain Communication

* The Gateway contract handles messages passing between different networks.
* Any kind of cross-chain messaging protocol can be plugged into the Gateway by implementing a specific gateway.
* The OneLayerGateway is the currently used specific gateway that serves as both publisher and receiver.
* Current version uses a secure backend service to read messages from source network and transmit them to a target network.

### Extensibility

The system is designed to be extensible:

* New networks can be added by configuring new Gateways.
* New types of assets or swap mechanisms can be integrated by updating the front end of the app.
* New messaging protocols can be adopted by implementing specific gateways.