Factory and Router

Factory and Router

What You Are Building

Your AMM handles one pair. A real DEX needs a Factory to create pairs on demand and a Router to make swaps user-friendly.

Factory responsibilities:

• Deploy new Pair contracts using CREATE2
• Register pairs in a mapping for lookup
• Ensure only one pair exists per token combination
• Order tokens canonically (token0 < token1)

Router responsibilities:

• Calculate optimal liquidity amounts (slippage protection)
• Execute multi-hop swaps (ETH → USDC → DAI in one transaction)
• Enforce deadlines (prevent stale transactions from executing)
• Handle WETH wrapping/unwrapping

CREATE2 Deterministic Deployment

The Factory uses CREATE2 to deploy pairs. The salt is keccak256(abi.encodePacked(token0, token1)). This means:

• Pair addresses are deterministic: you can calculate them without querying the blockchain
• The Router never needs to call the Factory to find a pair address
• This saves gas on every swap

Multi-hop Swaps

The Router supports swap paths. To swap ETH for DAI when no ETH/DAI pair exists:

path = [WETH, USDC, DAI]

The Router calculates amounts through each pair:

1. WETH → USDC (pair 1)
2. USDC → DAI (pair 2)

Each intermediate swap sends tokens directly to the next pair, minimizing transfers.

Your Task

Build a SimpleFactory and a SimpleRouter. The Factory creates pairs. The Router handles addLiquidity with slippage protection and multi-hop swaps with deadlines.