JIT Rebalancer Hook

Rebalancer

Overview

This project implements a Just-In-Time (JIT) liquidity provider hook for Uniswap V4. The hook is designed to dynamically add liquidity right before large swaps take place, ensuring liquidity providers can maximize their profit from such swaps and their is no slippage for the swap which makes it more profitable and a win-win for all parties involved. The JIT V4 hook integrates with the Chainlink Price Feed to accurately calculate the amount of liquidity to be added at the time of the swap based on current token prices. After the swap, the remaining liquidity and profit are automatically removed and sent back to our pair pool contract.

Table of Contents

• JIT Rebalancer Hook
  • Overview
  • Table of Contents
  • Video Walkthrough
  • Key Features
  • How It Works
  • Components
    • JIT Hook Contract
    • Chainlink Price Feed
    • Uniswap V4 Integration
  • Usage
    • Rebalancer Factory
    • Trigger Swap Handling
    • Deposit Liquidity
    • Withdraw Liquidity & Profits
    • Chainlink Price Fetching
    • Calculation Logic
    • Error Handling
  • License

Video Walkthrough

This is a video walkthrough of the project.

Video 2

Key Features

• Dynamic Liquidity Provisioning: The hook calculates the amount of liquidity to provide based on the size of the swap and the price of the token at the time of the swap.
• Chainlink Price Feed Integration: The real-time price of tokens is fetched using the Chainlink Price Feed, allowing the JIT hook to provide accurate liquidity based on market conditions.
• Post-Swap Liquidity Removal: After the swap occurs, the liquidity and profit are removed, and the funds are sent back to the JIT hook contract.
• Supports Pair Deposits: Liquidity providers can deposit token pairs our JIT hook to be used for liquidity provision.

How It Works

1. Swap Trigger Detection: When a large swap is initiated, the JIT hook is triggered to take action.
2. Price Fetching: The hook fetches the token price using Chainlink’s decentralized oracle network.
3. Liquidity Calculation: Based on the token price, the JIT hook calculates the amount of liquidity to be added within the tick range where the swap will occur.
4. Liquidity Addition: The calculated liquidity is provided to the Uniswap V4 pool just before the swap is executed.
5. Swap Execution: The swap is carried out with the newly added liquidity.
6. Profit Collection: After the swap, the JIT hook automatically removes the remaining liquidity and collects any profits made from the transaction.
7. Profit Distribution: The removed liquidity and profits are sent back to the pair pool contract.

Components

JIT Hook Contract

This is the core smart contract that manages the dynamic liquidity provisioning and profit distribution.

• rebalancerFactory(): Responsible for creating pair pools.
• depositLiquidity(): Allows liquidity providers (LPs) to deposit token pairs into our pair pool.
• withdrawLiquidity(): Removes liquidity and profits after the swap, sending them back to our pair pool.
• _getPrice(): Fetches the current token price from Chainlink Price Feed.

Chainlink Price Feed

This is the external oracle that provides the real-time price data for tokens involved in the swap. The JIT hook queries the price feed whenever liquidity needs to be added.

Uniswap V4 Integration

The JIT hook is integrated with the Uniswap V4 pool contract, enabling it to interact with the pool, add liquidity, and remove liquidity dynamically around swaps.

Usage

Rebalancer Factory

The rebalancer factory is used to create a new rebalancer contract for a given token pair and price feed.

 function rebalancerFactory(address _token0, address _token1, address _priceFeed) public returns (address);

Trigger Swap Handling

When a large swap is detected, the JIT hook will automatically execute the following:

1. Fetch the price from Chainlink.
2. Calculate the liquidity needed for the swap.
3. Add liquidity to the pool beforeSwap.
4. Execute the swap.
5. Remove the remaining liquidity and collect profits afterSwap.

Deposit Liquidity

function depositLiquidity(uint256 amount0, uint256 amount1) public

Description: Allows users to deposit amount0 of token0 and amount1 of token1 into the pool. Users receive shares proportional to their deposit. Parameters: amount0: Amount of token0 to deposit. amount1: Amount of token1 to deposit. Requirements: Both amounts must be greater than zero.

Withdraw Liquidity & Profits

Over time, liquidity providers can withdraw their profits from the JIT hook and sent directly to a centralized exchange.

Description: Allows users to withdraw their share of token0 and token1 from the pool. Parameters: shareAmount: The number of shares to burn for withdrawal. withdrawTo: The address to which the tokens will be sent. Requirements: The share amount must be greater than zero, and the user must have sufficient shares.

function withdrawLiquidity(uint256 shareAmount, address withdrawTo) external;

Chainlink Price Fetching

Description: Fetches the latest price of the tokens from the Chainlink price feed. Returns: The price of the token as an int256.

function _getPrice() public view returns (int256);

Calculation Logic

The hook uses the current price via chainlink to determine swaps that are eligble for JIT rebalancing.

Error Handling

The contract includes custom error handling for better gas efficiency: DepositMustBeGreaterThanZero: Raised when a deposit amount is zero. WithdrawalMustBeGreaterThanZero: Raised when a withdrawal amount is zero. InsufficientBalance: Raised when a user tries to withdraw more than their balance.

License

MIT License