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DCRDEX

Build Status ISC License GoDoc

What is DEX?

The Decred Decentralized Exchange (DEX) is a system that enables trustless exchange of different types of blockchain assets via a familiar market-based API. DEX is a non-custodial solution for cross-chain exchange based on atomic swap technology. DEX matches trading parties and facilitates price discovery and the communication of swap details.

Matching is performed through a familiar exchange interface, with market and limit orders and an order book. Settlement occurs on-chain. DEX's epoch-based matching algorithm and rules of community conduct ensure that the order book action you see is real and not an army of bots.

Trades are performed directly between users through on-chain contracts with no actual reliance on DEX, though swap details must be reported both as a courtesy and to prove compliance with trading rules. Trades are settled with pure 4-transaction atomic swaps and nothing else. Because DEX collects no trading fees, there's no intermediary token and no fee transactions.

Although trading fees are not collected, DEX does require a one-time registration fee to be paid on-chain. Atomic swap technology secures all trades, but client software must still adhere to a set of policies to ensure orderly settlement of matches. The maximum penalty imposable by DEX is loss of trading privileges and forfeiture of registration fee.

Contents

Client Quick Start Installation

  • It is recommended to have at least 2 GB of available system memory and 25 GB of free disk space to run the DEX client. For the most secure setup, you can also install in a fresh virtual machine.

You can use the dcrinstall tool to install everything you need. dcrinstall will guide you through installation of all needed software and help set up your Decred wallet.

./dcrinstall --dcrdex

dcrinstall will create a directory for your decred binaries. For Linux and Mac, the directory is at ~/decred. For Windows, it's %HOMEPATH%\decred. Any commands listed below are assumed be run from this directory. Instructions are for Linux. For Windows, you will drop the ./ prefix for commands.

WARNING: If instead of using dcrinstall you decide to build from source and you plan to trade on mainnet, use the release-v0.3 branch instead of master. Furthermore, if you build dcrd and dcrwallet from source, you must use their release-v1.7 branches, not master.

Sync Blockchains

Once installed, begin syncing your blockchains. In a new console, run

cd ~/decred

./dcrd

Decred should sync within a couple of hours.

In a different console, start syncing Bitcoin.

./bitcoind

The initial Bitcoin sync duration will vary, but more than a day is not atypical. By default, Bitcoin will run with pruning enabled. This will keep your blockchain storage down to a few GB, rather than the 400+ GB required to store the full blockchain. Note that you will download and validate the entire 400+ GB blockchain, but pruning will discard all but the critical parts.

You can modify bitcoin.conf to disable pruning. If this is all gibberish to you, you probably don't need to worry about it.

Important Notes on Wallets

  • If you already have Decrediton installed, upgrade Decrediton before running dcrinstall.

  • The DEX client is not yet compatible with dcrwallet's SPV-mode or CSPP mixed accounts.

  • You must keep dcrd, dcrwallet, and bitcoind running while the client is running. Do not shut down, lock, unlock, or otherwise modify your wallet settings while the client is running.

  • Because of the way fee estimation works, you should give bitcoind at least 6 blocks worth of run time before trading. Failing to allow bitcoind to "warm up" may result in higher transactions fees for your redemption transactions.

Client Configuration

These instructions assume you've used the Client Quick Start Installation. If you've used a custom installation for the client and/or blockchain software, adapt as necessary.

All commands listed below are of the Linux variety, and assume you already cd into the ~/decred directory created by dcrinstall.

Prerequisites

  1. dcrd, dcrwallet, and bitcoind should be running and synced.

  2. It is highly recommended that you create separate accounts for trading.

Creating a trading account for Decred

For Decred, start dcrwallet and create an account in your terminal or console using the dcrctl utility.

./dcrctl --wallet createnewaccount dex

Your dex trading account uses the wallet password you've set up with dcrinstall or ./dcrwallet --create.

Get an address for the new account, and transfer some funds. You'll need to deposit at least enough to cover the registration fee and on-chain fees for the registration transaction. The registration process will inform you how much to pay. At the time of writing, it was 1 DCR. Of course, if you plan to sell any DCR, you should deposit that too.

./dcrctl --wallet getnewaddress dex

Alternatively, you can get a deposit address during registration right after creating your wallet, from the wallets view link at the top right of the screen.

Creating a trading wallet for Bitcoin

For Bitcoin, you can create a trading wallet using the bitcoin-cli utility. bitcoin-cli will be included in the quick-start installation as well. You can replace dex with whatever name you want. The rest of the instructions will assume you chose dex.

./bitcoin-cli createwallet dex

It is recommended that you password-protect your Bitcoin trading wallet. We'll use read to prevent echoing the password.

read -s BTCPASS

Type your password and hit enter, then do

./bitcoin-cli -rpcwallet=dex encryptwallet $BTCPASS

You'll also want to instruct bitcoind to load the wallet at startup. Modify your bitcoin.conf file, located in the ~/.bitcoin directory on Linux, %APPDATA%\Bitcoin on Windows, and ~/Library/Application Support/Bitcoin on Mac OS. Open the file in a text editor and add the following line at the end of the file.

wallet=dex

Connect Wallets and Register

  1. Start the client. ./dexc
  2. In your browser, navigate to localhost:5758

  1. Create your client application password. You will use this password to perform all future security-sensitive client operations, including registering, signing in, and trading.

  1. Connect to your Decred wallet. The client will auto-fill most of your wallet settings, but you will need to specify the account name. If you haven't already, follow the instructions above to create a trading account. If you really, really want to trade on the default wallet account, the account name is default. Enter the wallet password, which is the password you set up with dcrwallet. Enter the app password you created in step 3.

  1. Enter the dex address, probably dex.decred.org.

  1. Check the registration fee, and enter your password one more time to authorize payment.

  1. On the markets view, while you're waiting for confirmations on your registration fee, add a Bitcoin wallet. You'll need to specify the wallet name. If you haven't already, follow the instructions above to create a trading wallet. If you really, really want to trade on the default wallet, leave the wallet name blank. Enter the wallet password you set up with bitcoin-cli. If you really, really want to trade on an unencrypted wallet, you can leave the wallet password blank. Enter the app password you created in step 3.

  1. And that's it! Once your registration fee has enough confirmations, you can begin trading.

Important Stuff to Know

Trades settle on-chain and require block confirmations. Trades do not settle instantly. In some cases, they may take hours to settle. The client software should not be shut down until you are absolutely certain that your trades have settled.

The client has to stay connected for the full duration of trade settlement. Losses of connectivity of a couple minutes are fine, but don't push it. A loss of internet connectivity for more than 20 hours during trade settlement has the potential to result in lost funds. Simply losing your connection to the DEX server does not put funds at risk. You would have to lose connection to an entire blockchain network.

There are initially limits on the amount of ordering you can do. We'll get these limits displayed somewhere soon, but in the meantime, start with some smaller orders to build up your reputation. As you complete orders, your limit will go up.

If your account is suspended, you can appeal the suspension. You may be asked to provide client log files to the operator for review. For dex.decred.org, reach out on Element to appeal.

Fees

DEX does not charge trading fees, but users pay on-chain transaction fees. Transaction fees vary based on how orders are matched.

To ensure that on-chain transaction fees do not eat a significant portion of the order quantity, orders must be specified in increments of a minimum lot size. To illustrate, if on-chain transaction fees worked out to $5, and a user was able to place an order to trade $10, they would lose half of their trade to transaction fees. For chains with single-match fees of $5, if the operator wanted to limit possible fees to under 1% of the trade, the minimum lot size would need to be set to about $500.

The scenario with the lowest fees is for an entire order to be consumed by a single match. If this happens, the user pays the fees for two transactions: one on the chain of the asset the user is selling and one on the chain of the asset the user is buying. The worst case is for the order to be filled in multiple matches each of one lot in amount, potentially requiring as many swaps as lots in the order. Check the dex specification for more details about how atomic swaps work.

Advanced Client Installation

Dependencies

  1. Go >= 1.16
  2. Node 14+ is used to bundle resources for the browser interface. It's important to note that the DEX client has no external javascript dependencies. The client doesn't import any Node packages. We only use Node to lint and compile our own javascript and css resources.
  3. dcrd and dcrwallet (non-SPV), installed from the v1.7.x release binaries, or built from the release-v1.7 branches.
  4. Bitcoin Core v0.21.x or v22.x (bitcoind or bitcoin-qt) wallet, encrypted.
  5. At least 2 GB of available system memory.

See the wiki for details on preparing the wallets.

Build the web assets from client/webserver/site/.

Bundle the CSS and JavaScript with Webpack:

npm clean-install
npm run build

If you have modified any of the HTML templates in client/webserver/site/src/html, it is necessary to regenerate the localize templates in client/webserver/site/src/localized_html:

go generate

Build and run the client from client/cmd/dexc.

go build
./dexc --testnet

Connect to the client from your browser at localhost:5758.

While dexc may be run from within the git workspace as described above, the dexc binary executable generated with go build and the entire site folder may be copied into a different folder as long as site is in the same directory as dexc (e.g. /opt/dcrdex/dexc and /opt/dcrdex/site).

Docker

Build the docker image

docker build -t user/dcrdex -f client/Dockerfile .

Create docker volume

docker volume create --name=dcrdex_data

Run image

docker run -d --rm -p 127.0.0.1:5758:5758 -v dcrdex_data:/root/.dexc user/dcrdex

DEX Specification

The DEX specification details the messaging and trading protocols required to use the Market API. Not only is the code in in the decred/dcrdex repository open-source, but the entire protocol is open-source. So anyone can, in principle, write their own client or server based on the specification. Such an endeavor would be ill-advised in these early stages, while the protocols are undergoing constant change.

Client Applications and the Core Package

The initial DEX release also includes the client Core module, written in Go. Core offers an intuitive programmer interface, with methods for creating wallets, registering DEX accounts, viewing markets, and performing trades.

dcrdex has two applications built with Core.

The browser-based GUI (a.k.a. "the app") offers a familiar exchange experience in your browser. The app is really just a one-client web server that you run and connect to on the same machine. The market view allows you to see the market's order book in sorted lists or as a depth chart. You can place your order and monitor it's status in the same market view. The GUI application is managed by the dexc utility in client/cmd/dexc.

The dexcctl utility enables trading via CLI. Commands are parsed and issued to Core for execution. dexcctl also requires dexc.

Server Installation

Dependencies

  1. Linux or MacOS
  2. Go >= 1.16
  3. PostgreSQL 11+, tuned and running.
  4. Decred (dcrd) and Bitcoin (bitcoind) full nodes, both with txindex enabled.

Set up the database

In a PostgreSQL psql terminal, run

CREATE USER dcrdex WITH PASSWORD 'dexpass';
CREATE DATABASE dcrdex_testnet OWNER dcrdex;

Generate a dcrwallet account public key

The master public key is used for collecting registration fees. Using dcrctl and dcrwallet, create a new account.

dcrctl --wallet --testnet createnewaccount fees

Get the master public key for the account.

dcrctl --wallet --testnet getmasterpubkey fees

Master public keys are network-specific, so make sure to specify the network to both dcrwallet and dcrctl, if not using mainnet.

Place the pubkey string into a new DEX configuration file.

~/.dcrdex/dcrdex.conf

# Testnet extended pubkey
regfeexpub=tpubVWHTkHRefqHptAnBdNcDJ...

# PostgreSQL Credentials
pgpass=dexpass

~/.dcrdex/ is the default app data directory location used by the DEX server, but can be customized with the --appdata command-line argument.

Run your asset daemons.

As of writing, only dcrd, bitcoind, and litecoind are supported. The txindex configuration option must be set. Be sure to specify the correct network if not using mainnet.

Create the assets and market configuration file

A sample is given at sample-markets.json. See the market json section of the wiki for more information on individual options.

Build and run dcrdex

From a command prompt, navigate to server/cmd/dcrdex. Build the executable by running go build. The generated executable will be named dcrdex. Run ./dcrdex --help to see configuration options that can be set either as a command line argument or in the dcrdex.conf file. The Exchange Variables section of the specification has additional information on a few key options.

Run the server.

./dcrdex --testnet

from server/cmd/dcrdex.

Contribute

Looking to contribute? We need your help to make DEX #1.

Nearly all development is done in Go and JavaScript. Work is coordinated through the repo issues, so that's the best place to start. Before beginning work, chat with us in the DEX Development room. The pace of development is pretty fast right now, so you'll be expected to keep your pull requests moving through the review process.

Check out these wiki pages for more information.

Source

The DEX specification was drafted following stakeholder approval of the specification proposal.

The source code for the DEX server and client are being developed according to the specification. This undertaking was approved via a second DEX development proposal.