Use the contents bar on the right to jump directly to answers of frequently asked questions!
What is the difference between an AMM and a traditional exchange?
There are two major types of cryptocurrency exchanges: traditional orderbook exchanges and automated market maker (AMM) exchanges. In the former, the orderbook matches users looking to buy with users looking to sell similar amounts of tokens. In the latter, users trade with a pool of tokens, rather than directly with other users. For blockchain applications, we believe that AMM-based exchanges are the superior approach because of their simplicity and composability.
Is the Solfina smart contract open-source?
Yes! Note that the Solfina smart contract uses the token-swap program developed by the Solana team.
What are the risks of using Solfina?
Solfina is a new application on a relatively new blockchain. There are a number of risks to using Solfina:
1. Smart contract vulnerabilities: The Solana mainnet is still in beta, and there is always the possibility of an exploit in the smart contract. To mitigate these risks, Solfina's smart contract uses the Solana Foundation's token-swap program, which has been audited. It is also very similar in structure to well-understood AMMs on Ethereum, such as Uniswap. Nonetheless, we strongly encourage taking the time to understand the risks before trading.
2. Impermanent loss: The more the token price at withdrawal diverges from the price when you deposited, the less your liquidity stake will be worth. Though this has historically been rare on Uniswap, large price swings could cause liquidity providers to lose money. For more information, this blog post from the Uniswap team is a great primer on impermanent loss.
3. Wallet providers: Solfina is compatible with a wide range of wallets, including Phantom, Solflare, MathWallet, Coin98 and an open-source Solana wallet called Sollet.io. A wallet exploit could affect the user.
Questions about Trading
What does "Your SOL balance is low" mean?
SOL is required to pay network (gas) fees. Fees are very low on Solana and you may be able make a number of transactions with a low balance, however it is recommended to keep at least 0.05 SOL in your wallet for gas.
What fees do I pay when I trade or swap tokens on Solfina?
Serum order book fee: Solfina leverages the Serum Central Limit Order Book (CLOB) to check for the best price for users during swaps. Transactions completed on the order book pay a taker fee of 0.22% to Serum that decreases based on the amount of SRM held.
Network fee: A nominal amount of SOL is also required to pay Solana network fees on each trade. Most trades cost between 0.0001 — 0.001 SOL.
How does the AMM work with the Serum Order Book?
The key differentiator in Solfina’s AMM is that liquidity on Solfina also creates a market on Serum that is tradable on any Serum DEX GUI. Because Solfina’s LPs take orders directly on the Serum central limit order book, anyone trading on Serum has access to that liquidity. This is different from almost every other AMM protocol where liquidity is siloed off from other trading platforms.
What is price impact?
Price impact is the difference between the current market price and the expected price for a trade. Price impact is primarily determined by the size of your trade relative to the amount of liquidity in the pool. As the number of tokens you buy from the pool increases, the price of the token increases as well. This unfavorable change in price is called price impact.
If you are swapping in a pool with very low liquidity, you may receive a very poor price for your swap. If you see high price impact when swapping, try trading a smaller amount or swapping in a pool with higher liquidity.
Why did my transaction fail?
Insufficient SOL: SOL is required to pay network fees (gas), it's recommended to keep at least 0.05 SOL in your wallet to ensure smooth transactions.
Slippage Tolerance: Transactions will fail if the price of the underlying pool moves past your Slippage Tolerance. Try increasing your slippage tolerance on the Swap page.
Approving Transactions: If you see the “Making Transaction” notification in the lower left-hand corner of your screen, you will need to approve the transaction in your SPL wallet.