🚀 Solana AMM — Constant Product Automated Market Maker (Anchor)

A fully functional Automated Market Maker (AMM) built using Solana + Anchor, inspired by protocols like Raydium and Uniswap V2.

This project implements a secure, PDA-based constant product liquidity pool with swap functionality, protocol fee accounting, slippage protection, and invariant enforcement.

---

🌐 Live Deployment

Devnet Program ID:

7kkDWEga2EJyMARYWH7SwjEBqCfpPWbzdQLDZB5psQ4F

View on Solana Explorer:

https://explorer.solana.com/address/7kkDWEga2EJyMARYWH7SwjEBqCfpPWbzdQLDZB5psQ4F?cluster=devnet

---

🌐 Devnet Verification

This AMM is deployed and verifiable on Solana Devnet.

🔗 Program

https://explorer.solana.com/address/7kkDWEga2EJyMARYWH7SwjEBqCfpPWbzdQLDZB5psQ4F?cluster=devnet

🔎 How To Verify

1. Open the program link above.
2. Click on recent transactions.
3. Inspect createPool, addLiquidity, and swap instructions.
4. Observe CPI calls to the SPL Token Program.
5. Confirm reserve updates in Pool PDA account.

This demonstrates real on-chain execution — not a local simulation.

---

✨ Features

• ✅ Initialize treasury (protocol fee collection)
• ✅ Create liquidity pool (PDA-based)
• ✅ Add liquidity (LP minting)
• ✅ Remove liquidity (LP burning)
• ✅ Token swaps (A ↔ B)
• ✅ Slippage protection
• ✅ Constant product invariant enforcement
• ✅ Protocol + LP fee splitting
• ✅ Secure vault authority using PDAs
• ✅ Success & failure test coverage

---

🧠 AMM Model

This AMM follows the constant product formula:

x * y = k

Where:

• x = reserve of Token A
• y = reserve of Token B
• k = invariant constant

After every swap:

k_after >= k_before

Fees ensure that liquidity providers gain value over time.

---

🏗 Architecture

User
 │
 ▼
User Token Accounts
 │
 ▼
Vault Token Accounts (PDA owned)
 │
 ▼
Pool Account (reserves + config)
 │
 ▼
Treasury (protocol fees)

Core Accounts

Account	Purpose
Pool PDA	Stores reserves & configuration
Vault A/B	Holds liquidity tokens
Vault Authority	PDA signer for vault transfers
LP Mint	Represents liquidity share
Treasury	Accumulates protocol fees

---

🔐 Security Properties

• PDA-based vault authority prevents unauthorized withdrawals
• Slippage protection prevents bad trades
• Checked arithmetic prevents overflow
• Invariant enforcement protects pool integrity
• Deterministic pool PDA ensures uniqueness per token pair

---

📊 Fee Model

Total swap fee is split into:

• LP Fee → stays inside pool (increases k)
• Protocol Fee → sent to treasury

This ensures:

• LPs earn yield
• Protocol earns sustainable revenue

---

🧮 Swap Formula

amount_out =
(reserve_out * amount_in_with_fee)
-----------------------------------
(reserve_in + amount_in_with_fee)

---

📁 Project Structure

amm-capstone/
│
├── programs/
│   └── amm-capstone/
│       ├── instructions/
│       ├── state/
│       ├── math.rs
│       ├── errors.rs
│       └── lib.rs
│
├── tests/
│   └── amm-capstone.ts
│
├── Anchor.toml
├── Cargo.toml
└── README.md

---

⚙️ Requirements

Install:

• Rust
• Node.js (>= 18)
• Yarn
• Solana CLI (recommended: 1.18.x)
• Anchor CLI (0.32.x)

---

🔧 Setup

Clone repository:

git clone https://github.com/mepavankumar15/raydium-protocol-amm.git
cd raydium-protocol-amm

Install dependencies:

yarn install

---

🧪 Local Development

1️⃣ Start Local Validator

solana-test-validator --reset

Keep this terminal running.

---

2️⃣ Configure Solana

solana config set --url localhost

Airdrop SOL:

solana airdrop 10

---

3️⃣ Build

anchor build

---

4️⃣ Deploy

anchor deploy

---

5️⃣ Run Tests

anchor test --skip-local-validator

---

🌐 Running on Devnet

Switch to devnet:

solana config set --url https://api.devnet.solana.com
solana airdrop 2

Deploy:

anchor deploy --provider.cluster devnet

Run tests against devnet:

anchor test --provider.cluster devnet --skip-local-validator

---

🧪 Test Coverage

✔ Initialize Treasury

Creates protocol fee account.

✔ Create Pool

Initializes pool PDA and vault accounts.

✔ Add Liquidity

Deposits tokens and mints LP tokens.

✔ Swap Tokens

Verifies:

• User balances change
• Reserves update
• Invariant holds

Example swap output:

Before Swap:
Reserve A: 500000000
Reserve B: 500000000

After Swap:
Reserve A: 599940000
Reserve B: 416875105

✔ Slippage Failure Test

Ensures swaps fail when min_out is unrealistic.

---

🔍 Inspecting On-Chain State

View Program

https://explorer.solana.com/address/7kkDWEga2EJyMARYWH7SwjEBqCfpPWbzdQLDZB5psQ4F?cluster=devnet

View Pool PDA

From test logs, copy poolPda and open:

https://explorer.solana.com/address/POOL_PDA?cluster=devnet

---

🚀 Example Workflow

Initialize Treasury
      ↓
Create Pool
      ↓
Add Liquidity
      ↓
Swap Tokens
      ↓
Collect Fees
      ↓
Remove Liquidity

---

📈 Why This Project Matters

This project demonstrates:

• Deep understanding of Solana PDAs
• CPI interaction with SPL Token program
• On-chain invariant enforcement
• DeFi swap mechanics
• Protocol fee modeling
• Slippage protection design
• Proper test coverage (success + failure cases)

This is not a template — it is a fully functioning on-chain AMM.

---

📜 License

MIT License

---

👨‍💻 Author

Pavan Kumar Kuchibhotla (avyu.rs) Solana | Rust | DeFi Engineering follow me on twitter , DM for collab ;)