Uniswap V2 Zap Router (Univ2ZapRouter.sol)

Overview

Univ2ZapRouter is a smart contract designed to simplify liquidity provision and removal on Uniswap V2. It enables users to "zap" into or out of a liquidity pool using a single input token (either ETH or an ERC20 token). The contract automatically handles the necessary swaps and liquidity operations, and for "zap-ins," it aims to calculate an optimal swap amount to maximize the LP tokens received by the user, considering Uniswap's 0.3% trading fee.

This project is built using Foundry.

Key Features

• Single Token Zap-In: Add liquidity to a Uniswap V2 pair using a single input token (ETH or ERC20).
  • Calculates an optimal amount of the input token to swap for the other token in the pair to maximize LP tokens minted.
• Single Token Zap-Out: Remove liquidity and receive a single output token (ETH or ERC20).
  • Withdraws both tokens from the pair and swaps one into the desired output token.
• Handles ETH and ERC20 tokens: Automatically wraps/unwraps ETH to WETH where necessary.
• Fee-on-Transfer Token Support: Includes logic paths for interacting with tokens that may have fees on transfer.
• Gas Optimized: Implemented with various gas-saving techniques (see Gas Optimizations section).
• Reentrancy Protected: Uses OpenZeppelin's ReentrancyGuard for enhanced security.
• Event Emissions: Emits ZapIn and ZapOut events for off-chain tracking.

How It Works

Zap-In (zapInSingleToken)

1. The user provides a single input token (tokenIn) and specifies the pair (tokenA, tokenB) they want to add liquidity to.
2. The contract calculates an optimal amount (toSwap) of tokenIn to swap for the other token in the pair. This calculation aims to provide liquidity in the new optimal ratio post-swap, maximizing LP tokens received.
3. If tokenIn is not one of the pair tokens, this scenario is not directly supported by zapInSingleToken (it assumes tokenIn is either tokenA or tokenB).
4. The toSwap amount of tokenIn is swapped for the other pair token.
5. The remaining amountIn - toSwap of tokenIn and the received amount of the other token are then added as liquidity to the Uniswap V2 pair.
6. LP tokens are sent to the user.

Zap-Out (zapOutSingleToken)

1. The user provides LP tokens for a specific pair (tokenA, tokenB) and specifies the single output token (tokenOut) they wish to receive.
2. The contract removes liquidity, receiving tokenA and tokenB from the pair.
3. If tokenOut is tokenA, the received tokenB is swapped for tokenA. The total tokenA (initial + swapped) is sent to the user.
4. If tokenOut is tokenB, the received tokenA is swapped for tokenB. The total tokenB (initial + swapped) is sent to the user.

Development Setup

Prerequisites

• Foundry

Build

Compile the smart contracts:

forge build

Test

Run the test suite:

forge test

To see gas reports:

forge test --gas-report

Or, for more detailed verbosity on tests:

forge test -vvv

Format

Ensure code is formatted correctly:

forge fmt

Gas Optimizations Report

Objective: To reduce the gas consumption of key functions in Univ2ZapRouter.sol and its deployment cost.

Optimizations Applied:

1. Address Caching: Cached address(this) and address(router) in local stack variables within zapInSingleToken and zapOutSingleToken to reduce repeated lookups.
2. Efficient Address Passing: Passed cached addresses as arguments to internal helper functions (_swapForPair, _addLiquidity) to avoid redundant lookups within them.
3. Targeted unchecked Math: Applied unchecked to the arithmetic amountIn - toSwap in _swapForPair, as its safety is guaranteed by prior require statements.
4. Optimized Fee-on-Transfer Swap Logic: Refined _swapForPair to calculate the received amount for fee-on-transfer tokens by taking a balance snapshot before and after the swap, ensuring accurate accounting.

Gas Consumption Comparison:

Metric	Original State	Optimized State	Savings	% Savings (Approx)
Deployment Cost (gas)	2,572,729	2,489,135	83,594 gas	3.25%
Deployment Size (bytes)	12,415	11,939	476 bytes	3.83%
zapInSingleToken
Avg Gas per Call	318,653	317,954	699 gas	0.22%
zapOutSingleToken
Avg Gas per Call	256,524	255,749	775 gas	0.30%

Summary: The applied optimizations resulted in notable improvements:

• A significant reduction in deployment cost by 83,594 gas and contract size by 476 bytes.
• Modest but consistent gas savings for runtime function calls:
  • zapInSingleToken is now cheaper by approximately 699 gas on average per call.
  • zapOutSingleToken is now cheaper by approximately 775 gas on average per call.

These changes enhance the efficiency of the Univ2ZapRouter contract.

Mathematical Derivations

Optimal Swap Amount for Zap-In (_optimalSwap)

The _optimalSwap(amountIn, reserveIn) function calculates the portion of amountIn that should be swapped to the other token in the pair to maximize LP tokens received, assuming a 0.3% trading fee (where tokenIn is one of the assets in the pair, and reserveIn is its corresponding reserve in the pool).

The formula implemented is: toSwap = (sqrt(reserveIn * (amountIn * 3988000 + reserveIn * 3988009)) - reserveIn * 1997) / 1994

The constants (3988000, 3988009, 1997, 1994) are derived from algebraic manipulation of the Uniswap V2 constant product formula, accounting for the 0.3% swap fee, to find the value of toSwap (x in many derivations) that maximizes the liquidity provided.

*(A more detailed step-by-step derivation can be added here if desired. This often involves:

1. Defining reserves before swap (R_in, R_out).
2. Defining amounts after swap (R_in - toSwap + amountSwappedIn, R_out - amountReceivedFromSwap).
3. Accounting for Uniswap fee: amountReceivedFromSwap = (toSwap * 0.997 * R_out) / (R_in + toSwap * 0.997).
4. Maximizing the product of the new reserves (or a function proportional to LP tokens, like sqrt((R_in - toSwap) * R_out_effective) if tokenIn is tokenA, where R_out_effective is the amount of tokenB after adding amountReceivedFromSwap to it). This optimization problem is typically solved using calculus (taking the derivative with respect to toSwap and setting to zero) or algebraic methods to find the optimal toSwap value.)*

Disclaimer

This is experimental software and is provided on an "as is" and "as available" basis. Interacting with DeFi protocols carries inherent risks. Always do your own research and exercise caution. The author is not responsible for any losses incurred.