Market Makers

Execute Market-Making for Limit Orders

To fill a user’s limit order x, market-makers must perform two actions:

1. Place an equal and opposite limit order x*.

2. Call the function make_order(x, x*).

Step 1: Placing the User's Limit Order

A user places a limit order with the following parameters:

• swap: The source chain, source token, and source quantity.

• to: The destination chain and destination token.

• at: The price in wei.

• with fee: The fee in basis points.

The quantity of the destination token (dst_token) that the user will receive on the destination chain is calculated as:

Example

A user wants to place a limit order on the Avalanche chain. The example parameters are as follows:

• Source Chain: Avalanche

• Source Token: 0xB97EF9Ef8734C71904D8002F8b6Bc66Dd9c48a6E

• Source Quantity: $106106$ (1,000,000 units)

The function call to place this limit order would look like this:

solidityCopy codeplaceTrade(
    src_chain = 'avalanche',
    src_token = '0xB97EF9Ef8734C71904D8002F8b6Bc66Dd9c48a6E',
    src_quantity = 10**6,
    to = 'destination_chain', // Specify the destination chain
    dst_token = 'destination_token', // Specify the destination token
    wei_price = price_in_wei, // Specify the price in wei
    bps_fee = fee_in_basis_points // Specify the fee in basis points
);

Step 2: Making the Order

After placing the limit order, the market-maker must place an equal and opposite limit order and then call the function make_order(x, x*) to complete the process.

Example function call:

make_order(
    x = user_order_details, // Details of the user's limit order
    x* = market_maker_order_details // Details of the market-maker's equal and opposite limit order
);

How to Call placeTrade() as a Maker

Setting the Fee

• Do not set the fee to 0.

• Set the fee to be the same amount that the user pays.

Receiving the Fee

• As the guarantor in the smart contract, you will receive this fee once the transaction is executed.

Example

pythonCopy code# Assume fee_amount is calculated based on the user’s transaction
fee_amount = calculate_fee(user_transaction)

# As the maker, call placeTrade with the calculated fee amount
placeTrade(trade_details, fee=fee_amount)

By setting the fee correctly, you ensure proper fee handling and consistency in the Mach protocol.

For more detailed information, refer to the specific line of code on GitHub (line 298).