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Create and use an AMM liquidity pool on the Logos Execution Zone

Get started creating a token pair pool, swapping, and managing liquidity on LEZ.​

This procedure covers the AMM program on the Logos Execution Zone, which manages liquidity pools and enables swaps between custom tokens. It walks through creating a liquidity pool for a token pair, swapping tokens, withdrawing liquidity, and adding liquidity back to the pool.

info

The AMM does not currently charge swap fees or distribute rewards to liquidity providers. LP tokens represent only a proportional share of the pool reserves. Fee support will be added in future versions.

Before you start, make sure you have the following:

  • The wallet CLI installed and configured against a LEZ sequencer
  • Two existing custom tokens (Token A and Token B) with funded holding accounts

What to expect​

  • You can create a liquidity pool for a token pair and receive LP tokens representing your share.
  • You can swap between the two tokens at a price determined by the pool's reserves.
  • You can withdraw or add liquidity at any time, with the AMM enforcing your minimum and maximum thresholds.

Step 1: Create a liquidity pool for a token pair​

Create an account to hold your LP tokens, then deposit tokens A and B to initialise the pool. In return for providing liquidity, you receive LP tokens representing your share of the pool; they are required to withdraw liquidity later.

  1. Create an account to hold your LP tokens:

    wallet account new public

    # Output:
    Generated new account with account_id Public/FHgLW9jW4HXMV6egLWbwpTqVAGiCHw2vkg71KYSuimVf

  2. Initialise the pool by depositing tokens A and B and specifying the account that will receive LP tokens:

    wallet amm new \
        --user-holding-a Public/9RRSMm3w99uCD2Jp2Mqqf6dfc8me2tkFRE9HeU2DFftw \
        --user-holding-b Public/88f2zeTgiv9LUthQwPJbrmufb9SiDfmpCs47B7vw6Gd6 \
        --user-holding-lp Public/FHgLW9jW4HXMV6egLWbwpTqVAGiCHw2vkg71KYSuimVf \
        --balance-a 100 \
        --balance-b 200
    • The LP holding account is owned by the token program, so LP tokens are managed using the same token infrastructure as regular tokens.

  3. Confirm the LP holding account is now owned by the token program:

    wallet account get --account-id Public/FHgLW9jW4HXMV6egLWbwpTqVAGiCHw2vkg71KYSuimVf

    # Output:
    Holding account owned by token program
    {"Fungible":{"definition_id":"7BeDS3e28MA5Err7gBswmR1fUKdHXqmUpTefNPu3pJ9i","balance":100}}
    • If you inspect the user-holding-a and user-holding-b accounts, you will see that 100 and 200 tokens were deducted. Those tokens now reside in the pool and are available for swaps by any user.

Step 2: Swap tokens​

Use wallet amm swap-exact-input to swap a fixed input amount of one token for the other, at a price determined by the pool's reserves.

  1. Run the swap, specifying the input amount, the minimum acceptable output, and the token you are providing:

    wallet amm swap-exact-input \
     --user-holding-a Public/9RRSMm3w99uCD2Jp2Mqqf6dfc8me2tkFRE9HeU2DFftw \
     --user-holding-b Public/88f2zeTgiv9LUthQwPJbrmufb9SiDfmpCs47B7vw6Gd6 \
     --amount-in 5 \
     --min-amount-out 8 \
     --token-definition 4X9kAcnCZ1Ukkbm3nywW9xfCNPK8XaMWCk3zfs1sP4J7

    The parameters used for the swap:

    • --amount-in: the amount of tokens to swap

    • --min-amount-out: the minimum number of tokens expected in return

    • --token-definition: the definition ID of the token you are providing. Here we swap TOKENA → TOKENB, so this is TOKENA's definition ID. Pass the raw base58 definition ID with no Public/ prefix — a prefixed value is rejected with invalid base58.

    • Once executed, 5 tokens are deducted from the Token A holding account and the corresponding amount, computed by the pool's pricing function, is credited to the Token B holding account.

Step 3: Withdraw liquidity from the pool​

Redeem (burn) LP tokens to withdraw a proportional share of the pool's reserves.

warning

This burns balance-lp LP tokens from your LP holding account. The min-amount-a and min-amount-b parameters set the minimum acceptable outputs; if the computed amounts fall below either threshold, the instruction fails to protect you against unfavourable pool changes.

  1. Run wallet amm remove-liquidity, specifying how many LP tokens to redeem and your minimum acceptable outputs:

    wallet amm remove-liquidity \
        --user-holding-a Public/9RRSMm3w99uCD2Jp2Mqqf6dfc8me2tkFRE9HeU2DFftw \
        --user-holding-b Public/88f2zeTgiv9LUthQwPJbrmufb9SiDfmpCs47B7vw6Gd6 \
        --user-holding-lp Public/FHgLW9jW4HXMV6egLWbwpTqVAGiCHw2vkg71KYSuimVf \
        --balance-lp 20 \
        --min-amount-a 1 \
        --min-amount-b 1
    • In return, the AMM transfers tokens A and B from the pool vaults to your holding accounts, based on current reserves. The amount received is proportional to the share of LP tokens redeemed relative to the total LP supply.

Step 4: Add liquidity to the pool​

Deposit tokens A and B in the ratio implied by current pool reserves. In return, the AMM mints new LP tokens representing your proportional share.

warning

max-amount-a and max-amount-b cap how many tokens A and B can be taken from your accounts. min-amount-lp sets the minimum LP tokens to mint; if the computed LP amount falls below this threshold, the instruction fails.

  1. Run wallet amm add-liquidity, specifying your maximum acceptable deposits and minimum acceptable LP tokens minted:

    wallet amm add-liquidity \
        --user-holding-a Public/9RRSMm3w99uCD2Jp2Mqqf6dfc8me2tkFRE9HeU2DFftw \
        --user-holding-b Public/88f2zeTgiv9LUthQwPJbrmufb9SiDfmpCs47B7vw6Gd6 \
        --user-holding-lp Public/FHgLW9jW4HXMV6egLWbwpTqVAGiCHw2vkg71KYSuimVf \
        --min-amount-lp 1 \
        --max-amount-a 10 \
        --max-amount-b 10
    • The AMM computes the required amounts based on the pool's reserve ratio, and takes no more than your specified maximums.