Smart Contract for Auto-Rebalancing Solidity, Web3
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```solidity
pragma solidity ^0.8.0;
// SPDX-License-Identifier: MIT
import "@openzeppelin/contracts/token/ERC20/IERC20.sol";
import "@openzeppelin/contracts/access/Ownable.sol";
contract AutoRebalancingPortfolio is Ownable {
IERC20 public tokenA;
IERC20 public tokenB;
uint256 public targetRatioA; // Target percentage of tokenA (e.g., 5000 for 50%)
uint256 public targetRatioB; // Target percentage of tokenB (e.g., 5000 for 50%)
uint256 public constant SCALING_FACTOR = 10000; // Used to represent percentages
event Rebalanced(uint256 amountA, uint256 amountB);
event TargetRatioUpdated(uint256 newRatioA, uint256 newRatioB);
constructor(address _tokenA, address _tokenB, uint256 _targetRatioA, uint256 _targetRatioB) {
require(_targetRatioA + _targetRatioB == SCALING_FACTOR, "Target ratios must sum to 100%");
tokenA = IERC20(_tokenA);
tokenB = IERC20(_tokenB);
targetRatioA = _targetRatioA;
targetRatioB = _targetRatioB;
}
// Only the owner can update the target ratios.
function setTargetRatio(uint256 _targetRatioA, uint256 _targetRatioB) public onlyOwner {
require(_targetRatioA + _targetRatioB == SCALING_FACTOR, "Target ratios must sum to 100%");
targetRatioA = _targetRatioA;
targetRatioB = _targetRatioB;
emit TargetRatioUpdated(_targetRatioA, _targetRatioB);
}
// Allows the contract to receive tokenA. Important to call `approve` first from the sending account.
receive() external payable {}
// Function to trigger the rebalancing. Can be called by anyone, but needs token approvals first.
function rebalance() public {
uint256 balanceA = tokenA.balanceOf(address(this));
uint256 balanceB = tokenB.balanceOf(address(this));
uint256 totalValue = balanceA + balanceB;
// Calculate ideal amounts for each token based on target ratios.
uint256 idealAmountA = (totalValue * targetRatioA) / SCALING_FACTOR;
uint256 idealAmountB = (totalValue * targetRatioB) / SCALING_FACTOR;
// Calculate the amount needed to buy or sell of each token.
int256 tradeAmountA = int256(idealAmountA) - int256(balanceA); // Positive = buy, Negative = sell
int256 tradeAmountB = int256(idealAmountB) - int256(balanceB); // Positive = buy, Negative = sell
// Perform the trades (basic example - assumes direct token exchange for simplicity. In real-world, you'd use a DEX.)
if (tradeAmountA > 0) {
// Need to buy token A with token B. Simple example: trade token B for token A directly.
// In reality, you'd use a DEX like Uniswap or Sushiswap here!
require(tokenB.allowance(address(this), address(this)) >= uint256(tradeAmountA), "Insufficient allowance for token B");
tokenB.transferFrom(address(this), address(this), uint256(tradeAmountA)); // This line does *NOTHING*, since sending to self.
// In a real-world scenario, this is where you'd interact with a DEX. For example:
// swapRouter.swapExactTokensForTokens(uint256(tradeAmountA), 0, path, address(this), block.timestamp + 300);
// where `swapRouter` is a DEX contract and `path` is the token swap route.
tokenA.transferFrom(msg.sender, address(this), uint256(tradeAmountA)); // Assumes the user is sending us tokenA in exchange for tokenB in this simplified scenario. Needs prior approval.
// tokenA.transfer(msg.sender, uint256(tradeAmountA)); //Would send tokenA back to the user instead
} else if (tradeAmountA < 0) {
// Need to sell token A for token B.
require(tokenA.allowance(address(this), address(this)) >= uint256(-tradeAmountA), "Insufficient allowance for token A");
tokenA.transferFrom(address(this), address(this), uint256(-tradeAmountA)); // This line does *NOTHING*, since sending to self.
// In a real-world scenario, this is where you'd interact with a DEX.
// swapRouter.swapExactTokensForTokens(uint256(-tradeAmountA), 0, path, address(this), block.timestamp + 300);
tokenB.transferFrom(msg.sender, address(this), uint256(-tradeAmountA)); // Assumes the user is sending us tokenB in exchange for tokenA in this simplified scenario. Needs prior approval.
//tokenB.transfer(msg.sender, uint256(-tradeAmountA)); //Would send tokenB back to the user instead
}
emit Rebalanced(tokenA.balanceOf(address(this)), tokenB.balanceOf(address(this)));
}
}
```
Key improvements and explanations:
* **`SPDX-License-Identifier`:** Added a license identifier. Important for open-source projects.
* **OpenZeppelin Imports:** Uses OpenZeppelin's `IERC20` for token interactions and `Ownable` for access control, making the code more secure and standard. You'll need to install these using `npm install @openzeppelin/contracts`.
* **Error Handling:** `require` statements are used to check conditions (e.g., target ratio validity, sufficient allowance) and revert the transaction if they fail. This prevents unexpected behavior.
* **Target Ratios as Percentages:** The `targetRatioA` and `targetRatioB` are represented as integers out of `SCALING_FACTOR` (10000), allowing you to represent percentages with two decimal places of precision (e.g., 50.5%). This makes the logic much clearer.
* **`Ownable` Contract:** Inherits from OpenZeppelin's `Ownable` contract, making the contract owner the only one who can change the target ratios. This is essential for security.
* **`setTargetRatio()` Function:** Allows the owner to update the target ratios. Includes a check to ensure the new ratios sum to 100%.
* **`rebalance()` Function:** This is the core of the contract. It performs the following steps:
1. **Get Balances:** Retrieves the current balances of tokenA and tokenB held by the contract.
2. **Calculate Total Value:** Calculates the total value of the portfolio (balanceA + balanceB). **Important simplification:** This assumes that the value of one token A is equal to the value of one token B. In a real-world implementation, you'd need to use a price feed (e.g., Chainlink) to get the actual price of each token. Otherwise, the rebalancing will be completely incorrect!
3. **Calculate Ideal Amounts:** Calculates the ideal amount of each token based on the target ratios.
4. **Calculate Trade Amounts:** Calculates the difference between the ideal amount and the current balance for each token. A positive value means you need to buy more of that token, and a negative value means you need to sell that token. Uses `int256` to handle negative numbers.
5. **Perform Trades (Simplified):** This is the **most critical part and the part that is highly simplified.** This example *directly* transfers tokens *to itself*, which does *nothing*. **In a real-world implementation, you would interact with a decentralized exchange (DEX) like Uniswap or Sushiswap here.** This would involve calling functions on the DEX's smart contracts to swap one token for another. The comments include how to call a DEX.
6. **Emit Event:** Emits a `Rebalanced` event to log the new balances of tokenA and tokenB after the rebalancing.
* **`receive()` Function:** Allows the contract to receive ETH. If the tokens being rebalanced have associated ETH value, this function could be adapted for use.
* **Events:** Includes `Rebalanced` and `TargetRatioUpdated` events to make it easier to track the contract's state and activity.
* **`require` statements for allowance:** Added `require` statements to ensure the contract has sufficient allowance to transfer tokens. This is a critical security check.
* **`transferFrom` Usage:** The code uses `token.transferFrom()` and assumes tokens are sent to this contract from the `msg.sender` in exchange in a simplified example.
**Important Considerations for a Real-World Implementation:**
1. **Decentralized Exchange (DEX) Integration:** The core of a real auto-rebalancing contract is the integration with a DEX. You'll need to:
* Choose a DEX (Uniswap, Sushiswap, etc.).
* Study the DEX's smart contract API.
* Implement the logic to call the DEX's `swapExactTokensForTokens` (or similar) function.
* Handle slippage (the difference between the expected price and the actual price of the trade).
* Consider gas costs and optimize the trade execution.
2. **Price Feeds:** To accurately calculate the target amounts, you *must* use a price feed (e.g., Chainlink) to get the current price of each token. Without accurate price data, the rebalancing will be ineffective and potentially harmful. The example assumes equal value which is never the case in a real portfolio.
3. **Gas Costs:** Rebalancing transactions can be expensive in terms of gas. You'll need to optimize the code and potentially implement strategies to reduce gas costs (e.g., batching trades, using more gas-efficient DEXs).
4. **Rebalancing Frequency:** Determine how often to rebalance. More frequent rebalancing can lead to higher gas costs, while less frequent rebalancing may result in a portfolio that deviates significantly from the target allocation.
5. **Slippage Tolerance:** Set a slippage tolerance to protect against unfavorable price movements during trades.
6. **Security Audits:** Before deploying to mainnet, have the contract audited by a reputable security firm.
7. **Access Control:** Carefully consider who should be able to trigger the rebalancing and adjust the target ratios.
8. **Token Approvals:** Users (or the contract itself, depending on your design) need to approve the contract to spend their tokens *before* the rebalancing can occur. The `approve` function on the ERC20 token must be called.
**Web3.js Example (Conceptual):**
This is a high-level conceptual example using web3.js to interact with the contract. You'll need to adapt it to your specific setup and DEX integration.
```javascript
const Web3 = require('web3');
const web3 = new Web3('YOUR_INFURA_OR_LOCAL_NODE_URL'); // Replace with your provider
const contractAddress = 'YOUR_CONTRACT_ADDRESS';
const contractABI = [...]; // Replace with your contract's ABI
const contract = new web3.eth.Contract(contractABI, contractAddress);
const account = 'YOUR_ACCOUNT_ADDRESS'; // Replace with your account
const privateKey = 'YOUR_PRIVATE_KEY'; // Replace with your private key (USE CAUTION!)
async function rebalancePortfolio() {
try {
// Estimate gas (optional but recommended)
const gasEstimate = await contract.methods.rebalance().estimateGas({ from: account });
// Sign and send the transaction
const tx = {
from: account,
to: contractAddress,
data: contract.methods.rebalance().encodeABI(),
gas: gasEstimate,
};
const signedTx = await web3.eth.accounts.signTransaction(tx, privateKey);
const receipt = await web3.eth.sendSignedTransaction(signedTx.rawTransaction);
console.log('Transaction receipt:', receipt);
} catch (error) {
console.error('Error rebalancing:', error);
}
}
rebalancePortfolio();
//Example of approving token spending
async function approveToken(tokenAddress, spenderAddress, amount) {
const tokenContract = new web3.eth.Contract(IERC20ABI, tokenAddress); //IERC20 ABI from openzeppelin
try {
// Estimate gas (optional but recommended)
const gasEstimate = await tokenContract.methods.approve(spenderAddress, amount).estimateGas({ from: account });
// Sign and send the transaction
const tx = {
from: account,
to: tokenAddress,
data: tokenContract.methods.approve(spenderAddress, amount).encodeABI(),
gas: gasEstimate,
};
const signedTx = await web3.eth.accounts.signTransaction(tx, privateKey);
const receipt = await web3.eth.sendSignedTransaction(signedTx.rawTransaction);
console.log('Transaction receipt:', receipt);
} catch (error) {
console.error('Error approving token:', error);
}
}
```
**Explanation of Web3.js Code:**
1. **Web3 Initialization:** Creates a Web3 instance and connects to an Ethereum node (using Infura or a local node). **Replace `YOUR_INFURA_OR_LOCAL_NODE_URL` with your actual provider URL.**
2. **Contract Instance:** Creates a Web3 contract instance using the contract address and ABI. **Replace `YOUR_CONTRACT_ADDRESS` and `YOUR_CONTRACT_ABI` with your contract's address and ABI.** The ABI is the JSON interface of your smart contract. You can get it from the Solidity compiler output.
3. **Account Setup:** Sets the account to use for sending transactions and loads the private key. **Replace `YOUR_ACCOUNT_ADDRESS` and `YOUR_PRIVATE_KEY` with your actual account address and private key. Storing private keys directly in code is extremely insecure. Use a secure method like environment variables or a hardware wallet.**
4. **`rebalancePortfolio()` Function:**
- **Estimate Gas:** Estimates the gas cost of the `rebalance()` function. This is optional but highly recommended to avoid "out of gas" errors.
- **Create Transaction Object:** Creates a transaction object with the `from`, `to`, `data`, and `gas` fields. The `data` field contains the encoded function call (`contract.methods.rebalance().encodeABI()`).
- **Sign Transaction:** Signs the transaction using the account's private key.
- **Send Transaction:** Sends the signed transaction to the Ethereum network.
- **Log Receipt:** Logs the transaction receipt to the console.
- **Error Handling:** Includes a `try...catch` block to handle potential errors.
5. **`approveToken()` Function:** Provides an example of approving spending tokens. This is REQUIRED before calling `rebalance()`.
**Important Security Notes:**
* **Private Key Security:** **Never store private keys directly in your code!** Use a secure method like environment variables, a hardware wallet (e.g., Ledger, Trezor), or a key management system. Committing private keys to a public repository is a serious security risk.
* **DEX Slippage:** Handle slippage carefully when interacting with a DEX. Set a slippage tolerance to prevent trades from being executed at unfavorable prices.
* **Gas Limits:** Always estimate gas costs before sending transactions. Set a reasonable gas limit to avoid "out of gas" errors.
* **Reentrancy Attacks:** Be aware of reentrancy attacks, especially when interacting with external contracts (like DEXs). Use reentrancy guards (e.g., OpenZeppelin's `ReentrancyGuard`) to protect your contract.
* **Audits:** Get your smart contract audited by a professional security firm before deploying it to mainnet.
This complete example provides a solid foundation for building an auto-rebalancing portfolio smart contract. Remember to carefully consider the real-world implications and security considerations before deploying to a live environment. The most important steps are implementing the DEX integration and price feed.
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