Strategies with Rain OrderBook — One Directional Orders, Two Order System and Slosh Orders.

Introduction :

This article is part of series of articles explaining different stratgies implemented with Rain OrderBook. In this article we will explore what are one directional orders, what is a two order system and what are slosh orders are and how we can leverage them.

Prerequisites :

Like mentioned in the prelude, the reader is expected to have a cursory understanding of Rainlang and the Rain Protocol ecosystem.

For more details checkout the Rain Protocol documentation : https://docs.rainprotocol.xyz/

One Directional Orders and Two Order System :

In the prelude, we saw how OrderBook smart contract along with the Arb contract and the bot mechanism executes the trade for exchanging USDT and USDC tokens. The anatomy of the order looks something like this :

Input Vaults Array : [USDC vault]
Output Vaults Array : [USDT vault]
Order expression: Expression having 100000000 USDT as max-amount and 101e16 as the ratio.

Once the order was placed and executed, our USDT was converted to USDC.

This is what we call as one directional order, as it only runs in a single direction, converting USDT to USDC (and not vice-versa).

Now what if we want to convert USDC back to USDT again at 1% profit ?

Simple answer is that we place another one directional order in the OrderBook, only this time our input vaults array and output vaults array will be swapped.

So our order would look something like this :

Input Vaults Array : [USDT vault]
Output Vaults Array : [USDC vault]
Order expression: Expression having 100000000 USDC as max-amount and 101e16 as the ratio.

Notice that the input and the output vaults are swapped here. Instead of having USDC in inputs array we have USDT, and instead of having USDT in ouputs array we have USDC.

Remember that we have 101 USDC already in the USDC vault as a result of execution of previously placed order, so when the user adds this new order to the OrderBook, it gets picked up by the bot which then sources arbitrage opportunities to convert 101 USDC to USDT at 1% profit i.e 102.01 USDT. Once the external market is offering this price, the order gets picked up by the bot and is executed and we have 102.01 USDT in our USDT vault.

Again, as soon as the second order is executed the first order now has 102.01 USDT in it’s output vault, so the bot again picks up this order checks for arb opportunities and converts 102.01 USDT to USDC at 1% profit for 103.0301 USDC. Again, the second order gets picked up and gets executed converting 103.0301 USDC to 104.060401 USDT, and so on.

• First order converts 100 USDT to 101 USDC
• Second order converts 101 USDC to 102.01 USDT
• First order converts 102.01 USDT to 103.0301 USDC
• Second order converts 103.0301 USDC to 104.060401 USDT
• …
• …

and so on. So the original deposit of 100 USDT keeps on compounding as the orders are executed one after another.

This is called a “Two Order System” where two separate orders share the same token vaults, only the input vaults for one are the output vaults for the other and vice versa.

So as you gather, there can be a “n Order System” where 2 or more than 2 independent orders share the input and output vaults and work in unison.

Slosh Orders.

Slosh orders are nothing but two one directional orders sharing the same “token-vaultId” indexed input and output vaults(like the vaults in above mentioned orders) combined into a single order, where tokens are perpetually traded for one another at the price offered by the market. (We say that the tokens are “sloshed”)

Example, take a look at the following order.

Order Expression :
max-amount: int-max-val(),
ratio: 101e16;
Order :
- Input Vaults Array : [USDT vault, USDC vault]
- Output Vaults Array : [USDT vault, USDC vault]
- Order expression: As written above

Firstly, we have max-amount set to int-max-val() which is a word in rainlang that returns 1.15792089237320006134268624010 × 10⁷⁷ (the maximum possible value for solidity uint256 data type) . It’s used here because we want maximum vault balance to be traded per trade. Ratio is same as before 101e16.

Now coming to the input and ouput vaults, we’ve kept both USDC and USDT vaults as input and output. This simply means that for any of USDT or USDC, user wants USDT or USDC at 1% profit.

Lets say that the user places this order and deposits 100 USDT in the USDT vault. So now lets track how this order will execute to better understand it.

- The order gets picked up by the bot, the bot sees that the order has USDT and USDC as output tokens. The USDC vault has 0 balance, but the USDT vault has a balance of 100. The bot takes the 100 USDT and converts it to USDC at 1% profit for 101.

- The bot again picks up the order, sees that the order has USDT and USDC as output tokens, the USDT vault balance is 0, but USDC vault has a balance of 101. The bot takes can converts 101 USDC to 102.02 USDT.

- Again, the order is picked up and 102.02 USDT is converted to 103.0301 USDC and so on.

So here we achieved the same output as the above two order system, with one single “slosh” order.

You can have any number of tokens in input and output vaults. Example :

- Input Vaults Array : [USDT, USDC, DAI, BUSD, USDP]
- Output Vaults Array : [USDT, USDC, DAI, BUSD, USDP]

You can have multiple slosh orders with different tokens and all will be picked by the bot.

This article is a part of series of articles explaining various strategies written for Rain OrderBook. Depending upon when one is reading this, things may have evolved, so please reach out to us on the Rainlang Telegram Group.

- RainProtocol Docs : https://docs.rainprotocol.xyz/

- RainProtocol Github : https://github.com/rainprotocol