Factory contracts are a pattern that DEX protocols use to efficiently manage functionality, governance, and extensibility. They automate the deployment of liquidity pools, enabling quick and efficient pool creation. They also provide transparency into a platform’s liquidity by serving as a comprehensive ledger for deployed pools. For developers building in DeFi, understanding factory contracts is key to fully leveraging the capabilities of on-chain liquidity.

How Factory Contracts Streamline Pool Deployment

At the core of DEXes is the factory contract. These smart contracts allow for easy deployment of liquidity pools. The process is simple: invoke the factory contract with the right parameters to deploy a pool contract.

By doing so, users can freely create a pool for any token pair while the protocol controls the mechanics.

This functionality enables token creators to quickly create pools tailored to their tokens. For DeFi data analysts, factory contracts offer insights into the protocol's deployed pools.

Differing Approaches Among Protocols

DEX protocols use factories differently. Uniswap and QuickSwap have one factory per protocol version. Curve takes a different approach. For each pool version, Curve has two deployment methods.

1. The registry allows the Curve core team to deploy pools.
2. The other factory contract is permissionless, allowing anyone to deploy pools.

This balances security with decentralization.

Curve Factory Contracts

Curve's Ethereum mainnet deployment has four factory contracts:

• StableSwap Registry: a registry of custom StableSwap pool (Curve v1) implementations deployed by Curve Core.
• StableSwap Factory: a permissionless StableSwap pool (Curve v1) factory.
• CryptoSwap Registry: a registry of custom CryptoSwap pool (Curve v2) implementations deployed by Curve Core.
• CryptoSwap Factory: a permissionless CryptoSwap pool (Curve v2) factory.

Curve deployments on other chains may have different configurations.

Aggregating a Comprehensive List

To get a full list of Curve pools, we have to aggregate pools found in all four factories and eliminate duplicates¹. This provides comprehensive coverage while eliminating redundancy between Curve's controlled registries and permissionless factories.

Having the list of all pools in Curve paved the way for us to inquire about one account’s LP positions in Curve.

Final Words

DEX factory contracts enable frictionless liquidity pool creation. Curve’s blended approach, which supports both centralized and decentralized pool creation, addresses conflicting ecosystem needs and enables developers to build faster.

As DeFi continues to grow, it is important to understand foundational design decisions that empower DeFi users and developers.

Footnote

¹ We aren’t sure why duplicates occur, but they do! Our assumption is that sometimes a permissionless pool is recognized by the core team.

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