Unlocking liquidity

n the previous smart offer tutorial, the offer we posted had to receive a transfer liquidity for it to succeed when taken. Now, we want instead to post the offer without transferring tokens from the admin to Mangrove or the OfferMakerTutorial (we call this unlocked or reactive liquidity). This way, the tokens are pulled just-in-time when the offer is taken and can thus be made available for other purposes (e.g., for generating extra yield in another DeFi protocol).

Note :

Since you are not committing your liquidity to your smart offer, you can post multiple offers with unlocked liquidity. We call that liquidity amplification.

For this to work, we use a so-called router - a smart contract that can be used to route tokens from the admin to the OfferMakerTutorial contract when the offer is taken.

First add the following import at the top of the file:

import {SimpleRouter} from "@mgv-strats/src/strategies/routers/SimpleRouter.sol";

Then, replace the noRouter() with a SimpleRouter() (specified as part of Direct.RouterParams) in the constructor definition:

      Direct.RouterParams({routerImplementation: new SimpleRouter(), fundOwner: deployer, strict: true})

and insert the following to the constructor body:

    router().bind(address(this));
    router().setAdmin(deployer);

Thus, the beginning of the tutorial should look like this:

import {Direct} from "@mgv-strats/src/strategies/offer_maker/abstract/Direct.sol";
import {ILiquidityProvider} from "@mgv-strats/src/strategies/interfaces/ILiquidityProvider.sol";
import {IMangrove} from "@mgv/src/IMangrove.sol";
import {MgvLib, OLKey} from "@mgv/src/core/MgvLib.sol";
import {Tick} from "@mgv/lib/core/TickLib.sol";
import {SimpleRouter} from "@mgv-strats/src/strategies/routers/SimpleRouter.sol";
/// @title An example offer maker used in tutorials
contract OfferMakerTutorial is Direct, ILiquidityProvider {
  ///@notice Constructor
  ///@param mgv The core Mangrove contract
  ///@param deployer The address of the deployer
  constructor(IMangrove mgv, address deployer)
    // Pass on the reference to the core mangrove contract
    Direct(
      mgv,
      // Use a router - i.e., transfer tokens to and from deployer
      Direct.RouterParams({routerImplementation: new SimpleRouter(), fundOwner: deployer, strict: true})
    )
  {
    router().bind(address(this));
    router().setAdmin(deployer);
  }
...

You can now redeploy the contract, activate it, and post an offer as before - remember to update the $OFFER_MAKER environment variable.

Note: you can follow those steps in the smart offer tutorial.

We will also need:

• To let the OfferMakerTutorial pull funds from the admin's reserve of WBTC.

• To make sure that the admin and/or taker have enough funds on their wallet (we can [mint](#Getting tokens) tokens if needed).

Getting tokens​

If the admin (acting as a maker) does not have required WBTC tokens then the smart offer will fail when taken.

Note: the offer could still be posted - a smart offer can source liquidity elsewhere on-chain.

If you don't have any WBTC, you can get some by using the following commands (taken from foundry documentation), or the corresponding faucet. Just look for a token holder with large amounts of WBTC - you can check the list on Polygonscan. Also, remember to add the chosen address under $LUCKY_USER in your .env file.

# Display the amount of WBTC in the admin wallet 
cast call $WBTC "balanceOf(address)(uint256)" $ADMIN_ADDRESS

# Impersonate the LUCKY_USER before making a transfer of 1 WBTC to our admin wallet
cast rpc anvil_impersonateAccount $LUCKY_USER
cast send $WBTC --unlocked --from $LUCKY_USER "transfer(address,uint256)(bool)" $ADMIN_ADDRESS 100000000

# Verify that the transfer was successful
cast call $WBTC "balanceOf(address)(uint256)" $ADMIN_ADDRESS

Approving the contract to pull the funds​

The router needs to be able to pull funds from the admin. First, we need to get the address of the router. We can do this like so (you did remember to update the $OFFER_MAKER variable, right?):

cast call --rpc-url $LOCAL_URL "$OFFER_MAKER" "router()(address)"

Let's put the address in an environment variable:

export ROUTER=<contract address> # 0xabcd..., the address of the router returned by the previous command

Finally, let's run the approval:

cast send --rpc-url $LOCAL_URL "$WBTC" "approve(address, uint)" "$ROUTER" 100000000 --private-key "$PRIVATE_KEY"

The OfferMakerTutorial now uses the approval of the SimpleRouter to transfer funds from the admin. If you wonder where the approval of the transfers from OfferMakerTutorial happens, then its the activate call. See approvals for more details on that topic.

cast call --rpc-url $LOCAL_URL "$OFFER_MAKER" "router()(address)"

Let's put the address in an environment variable:

export ROUTER=<contract address> # 0xabcd..., the address of the router returned by the previous command

Finally, let's run the approval:

cast send --rpc-url $LOCAL_URL "$WBTC" "approve(address, uint)" "$ROUTER" 100000000 --private-key "$PRIVATE_KEY"

The OfferMakerTutorial now uses the approval of the SimpleRouter to transfer funds from the admin. If you wonder where the approval of the transfers from OfferMakerTutorial happens, then its the activate call. See approvals for more details on that topic.