Breakwater

Powered by SwapVM — © Degensoft Ltd 2025

Breakwater is an Aqua/SwapVM liquidity position for DAO treasuries. It provides two-way stablecoin liquidity while the pair is healthy, then turns the same immutable position into a one-way exit market when an authenticated price feed detects a depeg.

During stress, a successful swap may never increase the strategy's virtual balance of the impaired asset. An exposure-reducing swap must remain executable at a bounded oracle-derived price.

Status

Breakwater passed its bounded ETHOnline 2026 sponsor spike and is now commissioning the public taker journey. Project-specific work began after the official kickoff at 2026-09-04T16:00:00Z; this repository was initialized at 2026-09-04T17:04:11Z.

The spike must prove:

1. an official Aqua/SwapVM token transfer;
2. a healthy two-way quote and swap;
3. an execution-time depeg guard that rejects impaired-asset accumulation;
4. an oracle-priced exposure-reducing swap;
5. the Aqua virtual-balance invariant across both token orderings; and
6. deterministic stale/invalid-feed and quote-to-execution behavior.

Those claims reproduce in the local suite and on the pinned Ethereum fork. The remaining launch gate is a cold completion of the public quote → approve → swap journey.

Primary target

ETHOnline 2026 Classic — 1inch, Build an Aqua App.

Build and reproduce

Node 24 is used in CI. Yarn 1 is invoked through npx so no global install is required:

npx -y yarn@1.22.22 install --frozen-lockfile
npx -y yarn@1.22.22 build
npx -y yarn@1.22.22 test

An optional pinned Ethereum-fork test exercises real USDC, USDT, and Chainlink feed contracts without broadcasting a transaction. It runs the same proof through both an exact-tag local deployment and 1inch's canonical Ethereum SwapVM v1.0.2 router:

MAINNET_RPC_URL=<ethereum-rpc-url> \
MAINNET_FORK_BLOCK=25905465 \
npx -y yarn@1.22.22 test:fork

The captured block, feed rounds, quote, and Aqua balance deltas are recorded in evidence/mainnet-fork-2026-09-04.md.

The taker console lives in web and reads the committed Sepolia market manifest. The intended public hostname is https://breakwater.dolepee.com; website access and an independent wallet completion remain launch checks:

cd web
npm install
npm run dev

Its production dependency audit, lint, and build can be reproduced with:

cd web
npm audit --omit=dev
npm run lint
npm run build

Taker safety contract

Before requesting the final executable quote, a taker must read BreakwaterGuard.currentOracleCommitment() and place that 32-byte value first in the official SDK's TakerTraits.instructionsArgs. The exact encoded traits used for that final quote must be reused for execution. If either complete feed observation changes, execution reverts and the taker must fetch a new commitment and requote.

The oracle commitment prevents a stale quote from executing against a new oracle round. It does not replace the SDK's minimum-output/maximum-input threshold or deadline; production takers should set all three controls.

The constructor rejects one feed address being reused for both assets. Before deployment, operators must still verify each distinct proxy's network, asset/USD denomination, heartbeat, and decimals against the oracle publisher's canonical registry; AggregatorV3 cannot prove those semantics to the guard itself.

The complete demonstration stack was deployed to Ethereum Sepolia on September 5, 2026. All 11 deployment and initialization receipts succeeded; addresses and transaction hashes are in evidence/sepolia-deployment-2026-09-05.json. The market uses no-value test tokens and fixed demonstration prices, not live Chainlink feeds. Protection applies only to this position, not other strategies or total wallet exposure. The taker buys impaired inventory; no recovery, redemption, or capital-preservation guarantee is made.

Local tests reproduce the same immutable stressed market. The separate pinned fork calls canonical Ethereum Aqua and AquaSwapVMRouter contracts, while Breakwater's fork transactions remain ephemeral state, not mainnet broadcasts.

The event-only deployer's dedicated public-market script self-deploys the exact pinned Aqua/SwapVM stack, immutable testnet-only price observations, two demo tokens, the guard, and a funded Aqua position. The reserve token faucet permits one 1,000-token claim per address and has a hard 100,000-token global issuance cap, so public claims cannot exhaust the 1,000,000-token unwind reserve. The maker retains a 200,000-token buffer; rerunning the deploy task restores any depleted active Aqua balance with Aqua.push without mutating the strategy.

The task emits BREAKWATER_PUBLIC_MANIFEST in the exact JSON shape consumed by web/lib/breakwater-deployment.json, plus a separate transaction-rich evidence record:

cp .env.example .env
# Fill PRIVATE_KEY and SEPOLIA_RPC_URL locally; never commit .env.
npm run deploy:public:sepolia

Provenance

Official 1inch dependencies and the official SwapVM template are pinned in DEPENDENCIES.md. AI assistance and reuse are disclosed in AI_DISCLOSURE.md.