How the DEX works

Technically there are two main components.

  • The order book - Contains all the signed orders (the NFTs which can be sold). The order book is off-chain.
  • The DEX smart contract - Exchanges the assets in a single transaction.

NFT Owner sells his NFT

DEX3 How the DEX works

The order book contains all the signed orders from the sellers (aka makers). Whenever someone wants to sell an NFT, the seller defines a fix price and the currency to pay with. After the seller creates a digital signature with his crypto wallet. This signed order will then be stored in the order book.

The buyer (aka taker) will select the signed order and submit this order to the DEX smart contract. The DEX smart contracts will validate the order (signature, price match, and so on). If the order and signature is valid the DEX smart contract will exchange the assets in a decentralized way in a single transaction.

Transaction analysis

All the following examples are based on the following definition in the table below.

Description Address
Dex Address 0x6a85796b158729474150d1c94a66184368d52142
Dex Operator 0x7c368f7d21503a1857c1b885470b330f5d26c4b7
WETH Address 0xb4fbf271143f4fbf7b91a5ded31805e42b2208d6
User1 - Seller 0x92e56418297664a34a91f0e3a6a81aa092f268f1
User2 - Buyer 0x0291170dd80c24f2059ca0ad840f3d6573a7a46b

Sell ERC721 NFT with ETH

User1 creates a sell order. 

{  
  "hash": "0x30ba20598b4e977f26465c25f7ba7bd6f4724924ae28cd3b81f67627ce323786",  
  "sig": "0x3f89a18f83ca12b65c94394f50ff9c7107bee18d4d22c1f067a4558c6b51f0213b38e2791042fab700c75560295bf40236f66a4efb2e2428933613867977c6d71c",  
  "order": {  
    "maker": "0x92e56418297664a34a91f0e3a6a81aa092f268f1",  
    "nftAddress": "0xec455e43adf3b073d9fef311205305ccf8e7574a",  
    "nftTokenId": "8680783491275350067",  
    "orderType": 0,  
    "maxNbrOfNftsToTrade": "1",  
    "erc20PaymentToken": "0x0000000000000000000000000000000000000000",  
    "pricePerNft": "1000000000000000",  
    "ttl": 1667329052257,  
    "nonce": 4914140582696146000  
  }  
}

User2 fills the order.

Etherscan TX Hash: 0x56e80bb136c9d4ac4e9ff9b54e3c8879b785b49cf4e58d3ba8c15e4ba96c49fa

Sell ERC721 NFT with WETH

User1 creates a sell order.

{  
  "hash": "0xfb997896b8bb7e5a43e9588037bb27a2b36e27a3033dcf9d659a3eee0a069cff",  
  "sig": "0xfe3fb89ceb9e5ba82b9085b298f81cf8c15e13ef6a9b42326c225c2ded066a5137c9930044ae5831f507f74c1b096eb267ed33055ba895097f8bb0ee6d023a9d1b",  
  "order": {  
    "maker": "0x92e56418297664a34a91f0e3a6a81aa092f268f1",  
    "nftAddress": "0xec455e43adf3b073d9fef311205305ccf8e7574a",  
    "nftTokenId": "1773901249514399562",  
    "orderType": 0,  
    "maxNbrOfNftsToTrade": "1",  
    "erc20PaymentToken": "0xb4fbf271143f4fbf7b91a5ded31805e42b2208d6",  
    "pricePerNft": "1000000000000000",  
    "ttl": 1667329561805,  
    "nonce": 142845367006028510  
  }  
}

User2 fills the order. etherscan TX Hash: 0xc9ea8a7529bdddcf67976d2615905fd16111575993662cec0f70363c5ae689bc

Bid for ERC721 with WETH

User2 wants to buy the NFT but there is no sell order. Therefor the User2 creates a bid order

{  
  "hash": "0xc0ed952de9a275d374dc0dc544b9b8f5fe1eca24ae6d6f62eb0e67361f5f53b2",  
  "sig": "0x0b797e630d6a5c9c6e17c06c78b1bf28d1a6e40828e9b47543ebeb27432249d34d04ca4dccc19f92bf615cb0b7f72957ab7d994fb9d6b2cd91f3b1c0745e2d5d1c",  
  "order": {  
    "maker": "0x0291170dd80c24f2059ca0ad840f3d6573a7a46b",  
    "nftAddress": "0xec455e43adf3b073d9fef311205305ccf8e7574a",  
    "nftTokenId": "5240129628470187580",  
    "orderType": 2,  
    "maxNbrOfNftsToTrade": "1",  
    "erc20PaymentToken": "0xb4fbf271143f4fbf7b91a5ded31805e42b2208d6",  
    "pricePerNft": "1000000000000000",  
    "ttl": 1667329785478,  
    "nonce": 7758329145365391000  
  }  
}

User1 fills the order. etherscan TX Hash: 0x01972a7704bfffba713881b30bedb044fcb734a75a9193d1c7c975170f9526ae

The difference here is that the NFT owner (User1) submits the transaction to the blockchain network.