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.

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.

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.

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.