osAMM Overview

At Ordiswap, our mission revolves around developing disruptive innovative builds that pioneer advancements on the Bitcoin network without the need for auxiliary layers. Our core functionality centres around the trading of crypto assets, all seamlessly settled directly on Bitcoin's robust layer. The heart of our innovation lies in our automated market-making (AMM), enabling users to trustlessly exchange a diverse array of Ordinals, Runes and BRC-20 assets.

This document delves into the intricate technical aspects of our AMM framework, showcasing the unique approach we've taken as a Layer 1 operator, eliminating the necessity for additional layers via Ordiswaps off-chain settlement mechanisms.

Architecture Overview:

Off-Chain Server:

  • Ordiswaps off-chain server manages the logic and parameters of the Automated Market Maker (AMM). This includes handling trades, liquidity provision, and setting dynamic AMM parameters.

BRC-20 Tokens:

These are tokenized assets on the Bitcoin network. They represent various assets, and Ordiswaps AMM facilitates the trading of these tokens.

Oracle System:

  • Ordiswaps off-chain server interacts and aggregates with several oracles in manner sOracle to obtain real-time price feeds for the BRC-20 tokens. Oracles play a crucial role in maintaining accurate pricing information.

User Wallets:

  • Users interact with our AMM through their wallets, sending trade requests to the off-chain server. Ordiswap only currently supports the Unisat Wallet.

Trade Execution Process:

User Request:

  • On Ordiswap, a user initiates a trade request, specifying the desired trade parameters (e.g., BRC-20 token pair, trade amount).

Off-Chain Order Matching:

  • Our cloud based off-chain server matches buy and sell orders based on the current market conditions and parameters set by our AMM.

Trade Validation:

  • Our server validates the trade, ensuring it complies with AMM rules (e.g., available liquidity, price limits).

Signature Verification:

  • The user signs the trade request with their private key, providing authorization for the trade.

Off-Chain Settlement:

  • Ordiswaps server updates the off-chain balances of the users involved in the trade. No on-chain transactions occur during this step.

Periodic On-Chain Settlement:

  • To maintain a connection with the security and finality of the Bitcoin blockchain, periodic settlements are performed by Ordiswap on-chain. The off-chain server then sends aggregated settlement transactions to the BRC-20 network.

AMM Parameter Updates:

  • Ordiswaps off-chain server may periodically adjust AMM parameters based on market conditions, trading volume, or other predefined criteria.

Challenges and Considerations:

  • Security:

    • We ensure the security of the off-chain server and the oracles by aggregation and obfuscating.

  • Trust Model:

    • Ordiswap users must trust the off-chain server to execute trades fairly and accurately. Transparency in our system's operation is crucial and considering the primitivate & disruptive nature of our build we reccomend users of Ordiswap to execute care in swaps and management of their BRC-20 assets.

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