defi-protocol

name	defi-protocol
description	Design and implement DeFi protocols — AMMs, lending markets, yield aggregators, and stablecoin mechanisms
allowed-tools	["Read","Write","Bash","Grep"]
effort	high

When to activate

• Building automated market makers (AMMs) or DEXes
• Implementing lending/borrowing protocols
• Designing yield farming or liquidity mining strategies
• Creating stablecoin mechanisms or synthetic assets
• Building liquid staking derivatives

When NOT to use

• For simple token transfers or payments
• For centralized exchange backends
• For traditional financial applications

Instructions

1. Define protocol type. AMM (Uniswap-style), Lending (Aave-style), Yield (Yearn-style), Stablecoin (Maker-style).
2. Model economics. Constant product formula (x*y=k), interest rate model (utilization-based), yield source identification.
3. Implement core contracts. Pool, Router, Token, Oracle. Use OpenZeppelin for standard components.
4. Design incentive structure. LP rewards, governance tokens, fee distribution, impermanent loss mitigation.
5. Security hardening. Oracle selection (Chainlink vs TWAP), flash loan protection, slippage controls, circuit breakers.
6. Testing. Fork mainnet tests with Foundry. Simulate flash loan attacks, oracle manipulation, edge cases.
7. Deployment. Deterministic deployment (CREATE2), multi-sig ownership, timelock for parameter changes.

Example

// Simplified AMM Pool (constant product)
contract SimplePool {
    uint256 public reserveA;
    uint256 public reserveB;
    
    function swap(address tokenIn, uint256 amountIn) external returns (uint256 amountOut) {
        // 0.3% fee
        uint256 amountInWithFee = amountIn * 997;
        
        if (tokenIn == tokenA) {
            amountOut = (reserveB * amountInWithFee) / (reserveA * 1000 + amountInWithFee);
            reserveA += amountIn;
            reserveB -= amountOut;
        } else {
            amountOut = (reserveA * amountInWithFee) / (reserveB * 1000 + amountInWithFee);
            reserveB += amountIn;
            reserveA -= amountOut;
        }
    }
}