clearsync

README

Yellow Clearing Network

This repository contains the smart contracts of Yellow Network.

Yellow Network is a Layer-3 peer-to-peer network that uses state channels technology to scale and facilitate trading, clearing and settlement. The core technology is called ClearSync.

In this system, participants of ClearSync can create and fund a state channel, which is a private communication channel between two parties that allows for off-chain transactions to occur. This means that transactions are not recorded on the main Ethereum blockchain until the channel is closed, which helps reduce congestion and increase transaction speed for high-frequency trading.

License

GPL-3.0

ClearSync is licensed under the GNU General Public License v3.0

Documentation

Project Wiki

Technical Paper

ClearSync Architecture

Project purpose

In traditional finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. Yellow Network facilitates the scaling of trading between crypto-currency exchanges by interconnecting them through a simple clearing protocol called ClearSync.

Business use cases

Inter-Exchange trading

Yellow Network has been initially created to facilitate medium-sized crypto-currency exchange to access a global liquidity network. Similarly to ECN in traditional finance but as a decentralized mesh network.

At present, small- and medium-sized brokers face difficulty in obtaining liquidity due to the lack of clearing systems or prime brokers. As a result, these businesses often have to depend on their own market-making trading bots, that can be a costly undertaking in terms of capital pre-funding. Furthermore, moving customer deposits on third-party exchanges also carries a non-trivial settlement counter-party risk.

Algo-Trading Firms and Market Makers

Trading companies can leverage a global network to position their servers in the most optimal location with respect to liquidity volumes. By utilizing Yellow Network's cloud architecture, these firms can benefit from reduced infrastructure and operational costs.

Furthermore, since Yellow Network doesn't require pre-funding of traded assets, trading firms can enhance their capital efficiency and gain access to a broader range of market opportunities.

Day Traders

For day traders, it is possible to open a few channels at the start of the trading day and execute all their trades in bulk until they are ready to settle on-chain. This approach helps day traders optimize their capital usage by keeping their funds available for the most critical trading opportunities.

Performance requirements

In ClearSync, all transactions occur off-chain; the decentralized clearing using state channels is able to achieve high throughput and low latency, making it a scalable and efficient solution for centralized (CeFi) and decentralized finance (DeFi) applications on the Ethereum network, but not limited by it.

ClearSync MUST be able to fund and defund channels under few minutes, it's expected that those direct channels (on-chain funded) lifespan is several weeks.

When parties are off-chains communication must be low latency and capable of high-frequency, margin request may occur several times per minutes, while proprietary trading protocol might be under 100 ms scale and capable of thousands of requests per seconds.

Features

• Open and close trading channels
  • Deposit fee using YELLOW / DUCKIES
  • Deposit Collateral in USDT, USDC, DAI, WETH, WBTC
• Example Price feed from major providers
• Example Risk Management module
• Sending high-frequency Margin request off-chain
• Ability to request a settlement
  • Using our provided JointCustody
  • Using other HTLC and escrow smart-contracts
  • Using third party custodian
• Ability to challenge a margin state to unlock the collateral
• Canary test network using DUCKIES for fees
• Ability to blacklist stolen funds using IBlacklist

Usage

npx hardhat help
npx hardhat test
npx hardhat node
npx hardhat run scripts/deployContract.ts

Deployments

Test Network

Goerli and Mumbai are used for development and test environment. The community of early adopters from Duckies platform and early supporters of Yellow Network may be invited for gorilla test sessions through testnet.yellow.org

Canary Network

Duckies is the canary network for Yellow, for testing ClearSync technology in a live environment prior to deployment on mainnet. New network participant must deploy first on Canary Network before rolling out to the mainnet.

DUCKIES ERC20 token and ClearSync is deployed on Polygon mainnet.

Here are addresses of deployed last versions of smart contracts on the Polygon chain:

Contract	Address
Duckies	0x18e73A5333984549484348A94f4D219f4faB7b81 ↗
TreasureVaultV1	0x68d1E3F802058Ce517e9ba871Ab182299E74D852 ↗
DucklingsV1	0x435b74f6DC4A0723CA19e4dD2AC8Aa1361c7B0f0 ↗
DuckyFamilyV1	0xB66bf78cad7cBab51988ddc792652CbabdFf7675 ↗

Main Networks

The first network for YELLOW ERC20 and ClearSync system will be on Ethereum mainnet, but the system can be extended later to Layer-2, Solana, or a Polkadot parachain.

Smart Contracts

contracts/Token.sol

This smart contract is an ERC20 used by both YELLOW and DUCKIES tokens. The YELLOW token is collateral to open a state channel with another network entity. Additionally, it is used to pay the settlement fees on the network.

contracts/duckies/

The smart contracts in this directory are specific to DUCKIES and include features unique to the Duckies sub-project. These features are designed to promote user engagement within the YELLOW community, particularly during the development phase of the Yellow network, and are related to the Duckies game and reward program.