DeFi Protocols Skill

Master DeFi protocol development including AMM mechanics, lending systems, yield optimization, and oracle integration.

Quick Start

Invoke this skill for DeFi development

Skill("defi-protocols", protocol_type="amm", chain="ethereum")

Topics Covered 1. AMM (Automated Market Makers)

Build decentralized exchanges:

Constant Product: x * y = k (Uniswap V2) Concentrated Liquidity: Tick-based (Uniswap V3) Stable Swaps: Curve invariant TWAP: Time-weighted average price 2. Lending Protocols

Create lending markets:

Overcollateralized: Aave/Compound model Interest Rates: Utilization-based curves Liquidation: Health factor, incentives Isolated Markets: Risk segmentation 3. Yield Optimization

Maximize returns:

Auto-compounding: Vault strategies Liquidity Mining: Reward distribution veTokens: Vote-escrowed governance Bribes: Gauge voting incentives 4. Oracle Integration

Secure price feeds:

Chainlink: Decentralized oracles TWAP: Manipulation resistant Staleness Checks: Price freshness Fallbacks: Multi-oracle setups Code Examples AMM Swap Calculation // SPDX-License-Identifier: MIT pragma solidity ^0.8.24;

library SwapMath { uint256 constant FEE_NUMERATOR = 997; uint256 constant FEE_DENOMINATOR = 1000;

/// @notice Calculate output amount for constant product AMM
function getAmountOut(
    uint256 amountIn,
    uint256 reserveIn,
    uint256 reserveOut
) internal pure returns (uint256) {
    uint256 amountInWithFee = amountIn * FEE_NUMERATOR;
    uint256 numerator = amountInWithFee * reserveOut;
    uint256 denominator = reserveIn * FEE_DENOMINATOR + amountInWithFee;
    return numerator / denominator;
}

/// @notice Calculate price impact percentage (basis points)
function getPriceImpact(
    uint256 amountIn,
    uint256 reserveIn
) internal pure returns (uint256) {
    return (amountIn * 10000) / (reserveIn + amountIn);
}

}

Chainlink Oracle // SPDX-License-Identifier: MIT pragma solidity ^0.8.24;

import "@chainlink/contracts/src/v0.8/interfaces/AggregatorV3Interface.sol";

contract PriceOracle { AggregatorV3Interface public immutable priceFeed; uint256 public constant STALENESS_THRESHOLD = 1 hours;

error StalePrice();
error InvalidPrice();

constructor(address feed) {
    priceFeed = AggregatorV3Interface(feed);
}

function getPrice() external view returns (uint256) {
    (, int256 price,, uint256 updatedAt,) = priceFeed.latestRoundData();

    if (block.timestamp - updatedAt > STALENESS_THRESHOLD) {
        revert StalePrice();
    }
    if (price <= 0) revert InvalidPrice();

    return uint256(price);
}

}

Flash Loan Callback // SPDX-License-Identifier: MIT pragma solidity ^0.8.24;

import "@aave/v3-core/contracts/flashloan/base/FlashLoanSimpleReceiverBase.sol";

contract Arbitrage is FlashLoanSimpleReceiverBase { function executeOperation( address asset, uint256 amount, uint256 premium, address, bytes calldata ) external override returns (bool) { // Execute arbitrage logic here

    // Repay: amount + premium
    IERC20(asset).approve(address(POOL), amount + premium);
    return true;
}

}

DeFi Math Formulas Constant Product AMM Invariant: x * y = k Output: dy = y - k/(x + dx) Price: p = y/x Slippage: dx/(x + dx) * 100%

Interest Rates Utilization: U = borrows / (deposits + borrows) Borrow Rate: R = base + slope * U (when U < optimal) Supply Rate: R_supply = R_borrow * U * (1 - reserve_factor)

Health Factor HF = (collateral * liquidation_threshold) / debt Liquidation when HF < 1

Common Pitfalls Pitfall Risk Prevention Spot price oracle Flash loan manipulation Use TWAP No slippage check Sandwich attacks Enforce min output Stale prices Wrong liquidations Check updatedAt Reentrancy Fund drainage CEI + guards Security Checklist Oracle staleness validation Slippage protection Flash loan attack resistance Reentrancy guards Access control on admin Emergency pause mechanism Timelock on parameters Troubleshooting "Oracle price deviation"

Compare oracle vs DEX price

cast call $ORACLE "latestRoundData()" --rpc-url $RPC cast call $POOL "slot0()" --rpc-url $RPC

"Sandwich attack detected"

Add minimum output enforcement:

require(amountOut >= minAmountOut, "Slippage exceeded");

Protocol Addresses (Mainnet) Protocol Contract Uniswap V3 Router 0xE592427A0AEce92De3Edee1F18E0157C05861564 Aave V3 Pool 0x87870Bca3F3fD6335C3F4ce8392D69350B4fA4E2 Chainlink ETH/USD 0x5f4eC3Df9cbd43714FE2740f5E3616155c5b8419 Cross-References Bonded Agent: 04-defi-specialist Related Skills: solidity-development, smart-contract-security Version History Version Date Changes 2.0.0 2025-01 Production-grade with math, security 1.0.0 2024-12 Initial release