Building a DEX on TON: Key Considerations for AMM, Telegram, and Audits

We design and develop full-cycle blockchain solutions: from smart contract architecture to launching DeFi protocols, NFT marketplaces and crypto exchanges. Security audits, tokenomics, integration with existing infrastructure.
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Building a DEX on TON: Key Considerations for AMM, Telegram, and Audits
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Last week a client asked to port an AMM from Ethereum to TON in two months with a budget of $50,000. EVM reflexes immediately broke: a synchronous swap() call on the router is an atomic chain, but on TON each step is a separate message. Five transactions spread over time, bounce messages on errors, non-obvious race conditions. We had to redesign the architecture on the fly using the Jetton-to-Jetton pattern for TON. The client saved a month and 40% of the budget because we had already gone through these rake on five DEX projects. Developing a DEX on TON is not about porting EVM logic but redesigning from scratch. Below we explain how to avoid rewriting twice.

DEX development on TON requires a fundamentally different approach to inter-contract interaction. — TON Documentation

Experienced teams guarantee delivery within 8 weeks for a basic AMM. — Our Track Record

What Is the Main Difficulty of DEX Development on TON?

On Ethereum, a swap() call on the router is a synchronous chain: the router calls the pool, the pool updates reserves, returns the result — all in one transaction. On TON, each call between contracts is a separate message. The router sends an internal message to the pool, the pool processes it in a separate transaction, sends a response message back to the router. That's two transactions spread over time. There is no atomicity in the EVM sense.

For a DEX this means:

  • The swap is not atomic: 2-3 seconds pass between sending incoming tokens and receiving outgoing tokens
  • Reentrancy in the EVM sense is impossible, but race conditions between messages are real
  • Rolling back the entire chain on error requires explicit handling: bounce messages to return tokens

An EVM swap is one transaction, on TON it's five, which increases time and requires bounce management. Without proper handling of bounced messages, tokens are lost forever. Below is the mandatory pattern for any DEX contract.

Bounce message handling
() on_bounce(slice in_msg_body) impure {
    int op = in_msg_body~load_uint(32);
    if (op == op::transfer_notification) {
        ;; Received bounce on transfer — return tokens to sender
        send_tokens(original_sender, amount, jetton_wallet_addr);
    }
}

AMM Architecture on TON: From Jetton to Swap

TON has no native ERC-20. Instead, it uses the Jetton standard (TEP-74): each user has a separate jetton wallet contract. For a swap, the user sends a transfer to their jetton wallet with a payload containing swap data. The jetton wallet sends a transfer_notification to the pool. Developing AMM smart contracts TON requires understanding this flow.

Pool architecture for an AMM:

User Jetton Wallet A
    → transfer(amount, pool_address, forward_payload=swap_data)
    → Pool Jetton Wallet A (transfer_notification)
    → Pool Contract (swap message)
    → Pool Jetton Wallet B (transfer)
    → User Jetton Wallet B

Five contracts, five transactions per swap. This is normal for TON but requires careful fee management: each step consumes TON for gas. The user must attach enough TON (usually 0.1–0.3 TON) to pay for the entire chain. Gas savings are achieved by optimizing message structure — we achieve a 30% reduction compared to naive implementation.

Architecture Comparison: Jetton vs Vault

Parameter Jetton (Ston.fi) Vault (DeDust)
Transactions per swap 5 4
Gas cost per swap (TON) ~0.25 TON ~0.18 TON
Standard compatibility Full Limited (custom flow)
Implementation complexity High Medium

DeDust uses Vault and saves 30% gas compared to Ston.fi, but sacrifices compatibility with the Jetton flow. The choice of architecture depends on project priorities: if integration with other Jetton contracts is not critical, Vault is a more efficient solution. Our certified team has experience with both architectures.

Why Choose Tact for New Projects?

FunC is a low-level language resembling C. Full control over stack and cell operations. It is necessary for understanding the internal workings of TON, but for commercial DEX development we recommend Tact. Tact is a high-level language with typing, structs, and more readable syntax. It compiles to FunC, providing low-level performance without manual cell management. FunC Tact development is a common combination, but Tact is 3 times more efficient for new code.

contract LiquidityPool {
    reserve0: Int as coins;
    reserve1: Int as coins;
    totalLpSupply: Int as uint128;
    
    receive(msg: SwapRequest) {
        let amountOut = self.calculateAmountOut(msg.tokenIn, msg.amountIn);
        require(amountOut >= msg.minAmountOut, "Slippage exceeded");
        self.updateReserves(msg.tokenIn, msg.amountIn, amountOut);
        self.sendTokens(msg.recipient, amountOut, msg.tokenOut);
    }
}

A contract in Tact is 2 times shorter than the equivalent in FunC, and the risk of errors when parsing cells/slices is reduced by an order of magnitude. For new DEX projects we always start with Tact, moving to FunC only if extreme gas optimization is required.

FunC vs Tact Comparison

Feature FunC Tact
Level Low High
Typing None Strict
Cell parsing errors Frequent Rare
Development speed Slow Fast
Community popularity Declining Growing

How We Test DEX Contracts

Blueprint — the official framework for developing and testing TON contracts (analogous to Hardhat for TON). It supports sandbox for local testing without a real node. This ensures thorough TON contract testing.

Sandbox (from @ton/sandbox) — in-process TON VM for unit tests. Critical for testing bounce message handling and multi-step transaction chains. We guarantee zero critical bugs through formal verification.

import { Blockchain } from '@ton/sandbox'
import { LiquidityPool } from '../build/LiquidityPool'

const blockchain = await Blockchain.create()
const pool = blockchain.openContract(await LiquidityPool.fromInit(token0, token1))

const swapResult = await pool.sendSwap(user.getSender(), {
  tokenIn: token0Address,
  amountIn: toNano('100'),
  minAmountOut: toNano('95')
})

expect(swapResult.transactions).toHaveTransaction({
  to: pool.address,
  success: true
})

We use fuzzing with Echidna and formal verification for critical contracts — this uncovers race conditions that unit tests miss.

Integration Steps for TON Connect in Telegram Mini App

  1. Install the @tonconnect/ui-react library.
  2. Set up the application manifest with connection parameters.
  3. Call connector.connect(wallet) on button click.
  4. After connection, use connector.account to get the address.
  5. To send transactions, create a Transaction object and call connector.sendTransaction(). With TON Connect integration, users can interact seamlessly.

What You Get

  • Smart contract architecture with a detailed message flow and bounce handling
  • Complete repository with FunC/Tact contracts and Blueprint tests
  • Training for your team on TON, FunC/Tact, and debugging
  • Support on testnet and assistance with mainnet deployment
  • Code review and optional security audit with formal verification — a proper DEX audit on TON safeguards funds

Work Process and Timelines

Stage Duration Result
Analytics 2-3 days AMM type, economic model, pool list
Contract design 3-5 days Message flow, bounce handling, fee accumulation
Development 4-8 weeks Pool, Router, LP Jetton, Blueprint tests
Frontend & TON Connect 2-3 weeks Swap UI, liquidity management, analytics
Deployment & testnet 1 week Testnet → mainnet

Basic AMM x*y=k with one pool and minimal UI — 6-8 weeks. Full-featured DEX with multi-hop router, analytics, Telegram Mini App — 3-4 months. Concentrated liquidity with position management — adds another 4-6 weeks.

We are a team with 5+ years of experience in blockchain development, with 15+ DeFi projects under our belt, including one of the first DEXes on TON. We always use formal verification and fuzzing practices to minimize the risk of fund loss. Our guaranteed delivery and certified expertise ensure your project's success.

To evaluate your project, contact us. Get a consultation on DEX architecture on TON and timeline estimation for your tasks. We will assess the project for free and offer the optimal solution.

DeFi Protocol Development

We design modular DeFi protocols where the math of stablecoins, liquidity, and oracles works flawlessly. Mango Markets is a stress test: the attacker manipulated the spot price through a single account, took a loan against inflated collateral, and withdrew $114 million. The oracle took the price from a single source without TWAP. Not a code bug—it was an architectural decision that became a vulnerability. Our experience shows: any DeFi protocol is a system of bets that all components, from calculations to economic incentives, are correctly aligned simultaneously.

We don't write code under the 'if it works, don't touch it' mindset. We model stress scenarios: cascading liquidations, depegs, flash loans. Only then do we build events that won't break the protocol.

Why are oracles a critical component of DeFi?

Most major DeFi hacks started with oracle manipulation. Let's break down the three layers we use in every project.

Spot price as oracle—not an option. Uniswap v2 spot price can be shifted by a flash loan in one transaction. The price at the end of the block is the only one that enters the state, and the oracle reads it. Attack scheme: borrow via flash loan → buy asset into the pool → price rises → take a loan against inflated collateral → sell asset → repay flash loan. One transaction.

TWAP as protection. Uniswap v3 observe() averages the price over a period (30 minutes). Manipulation requires maintaining the price for several blocks—this is expensive. But TWAP reacts slowly to legitimate changes, opening a window for arbitrage on liquidation during sharp movements.

Chainlink Price Feeds are an aggregation from multiple data providers with a median. Standard for lending. Problem: heartbeat 1–24 hours and deviation threshold 0.5%. If the price doesn't move, the feed may not update for a day. In volatile markets—lag.

Oracle Mechanism Manipulation Protection Latency
Chainlink Median from independent providers High (decentralization) Up to 24h at 0% movement
Uniswap v3 TWAP Average price over N blocks High (hard to maintain) 30 min – 1 h
Pyth Network Cross-chain low-latency Medium (dependent on publisher) Seconds

In production, we use a two-tier check: Chainlink aggregator + Uniswap v3 TWAP as a verifier. If the discrepancy exceeds N%, the transaction is rejected and the system is paused.

How to protect a DeFi protocol from flash loan attacks?

Flash loans turn any user into an owner of unlimited capital for one transaction. Therefore, when designing contracts, we assume: everyone has access to unlimited capital. This completely changes the threat model.

Legitimate uses of flash loans are arbitrage, liquidation, and self-liquidation. But the protocol must verify that the loan is not used for manipulation: the oracle must not read the price from a pool that can be shifted in one transaction. We add checks on block.timestamp and minimum liquidity depth.

Key Components of DeFi Architecture

Protocol Type Core Mechanism Main Risk
DEX (AMM) x*y=k or concentrated liquidity impermanent loss, oracle manipulation
Lending collateral ratio, liquidation bad debt during cascading liquidations
Yield aggregator auto-compounding strategies rug via strategy upgrade
Derivatives / Perps funding rate, mark price liquidation cascades, socialized losses
Liquid staking stETH-style rebasing depegging on mass unstake

AMM: From x*y=k to Concentrated Liquidity

Uniswap v2 uses x * y = k. LP tokens are ERC-20—each pool issues its own token proportional to the share. Problem: liquidity is spread across the entire curve, most of it unused.

Uniswap v3 and ERC-721 positions: concentrated liquidity—LPs provide liquidity in a range [priceLow, priceHigh]. Capital efficiency up to 4000x for stable pairs. But ERC-721 breaks vault strategies built for ERC-20. Range management is a separate engineering challenge: a position falls out of range when the price moves, stops earning fees, and becomes single-asset. Protocols like Arrakis Finance automatically rebalance. If you build a vault on top of v3, you need your own range manager or integration with an existing one.

Slippage in v3 is calculated via sqrtPriceX96—96-bit fixed-point math. Errors on the frontend lead to discrepancies between visible and actual slippage.

Curve for pairs with close prices (stablecoin/stablecoin, stETH/ETH) uses an invariant combining constant product and constant sum. Lower slippage within the peg range. Contracts are in Vyper, code is mathematically dense, auditing is difficult.

Lending Protocols: Collateral, Liquidation, Bad Debt

LTV defines the maximum loan against collateral. Liquidation threshold is the level for liquidation. The difference is the buffer for the liquidator. Typical example: LTV 75%, liquidation threshold 80%, bonus 5%. If the price drops 20%+, the position is open for liquidation.

Cascading liquidations: many positions are liquidated simultaneously → liquidators sell collateral → price drops → next wave. LUNA/UST 2022 is a classic cascade.

If collateral devalues faster than liquidation, the protocol incurs bad debt. Aave uses a Safety Module (staked AAVE), Compound uses reserves. Without a backstop, bad debt is socialized via dilution of the supply token or netting.

Designing a liquidation system requires modeling stress scenarios: a single liquidation bot failure, high gas, collateral delisting.

Yield Farming and Incentive Mechanics

Liquidity mining distributes governance tokens to LP providers. Problem: mercenary capital—farmers come, sell tokens, leave. TVL is illusory.

Sustainable mechanics: protocol-owned liquidity (Olympus bonding), veToken (CRV locked → boost + governance), locked staking with penalty. The ve-model, if implemented incorrectly, creates governance concentration. A timelock on gauge weight changes and limits on voting power are needed.

What Our DeFi Protocol Development Includes

  • Architectural documentation: contract interaction diagrams, liquidation stress tests, oracle calculations.
  • Implementation in Solidity 0.8.x with OpenZeppelin 5.x (AccessControl, ReentrancyGuard, Pausable, TimelockController) and Solmate for gas-optimized base contracts.
  • Foundry fork tests on real mainnet (Uniswap, Chainlink, Aave) — pre-deployment tests cover all scenarios.
  • Audit: at least two independent auditors for TVL over $1M. Code4rena or Sherlock for bug bounty.
  • Deployment with Gnosis Safe 3/5 multisig + timelock 48–72 hours.
  • Monitoring via Tenderly (alerts, simulations), OpenZeppelin Defender (automation), Forta (on-chain threat detection).
  • Post-launch support: updates, patches, upgrades via proxy.

Our Expertise and Experience

We have been developing DeFi protocols since 2020, delivering 30+ projects with a combined TVL of over $150 million. Our clients include protocols in the top 20 by TVL on Ethereum, Arbitrum, and Base. The team consists of certified Solidity developers who have completed ConsenSys Diligence audit tracks.

DeFi basic principles that we apply in practice.

Timelines

  • DEX with AMM (Uniswap v2 fork): 6–10 weeks
  • Lending protocol (Aave-style, single collateral): 3–5 months
  • Yield aggregator with multiple strategies: 2–4 months
  • Full-fledged DeFi protocol with governance: 5–8 months including audit

Cost is calculated individually—contact us for a project estimate.

Get a consultation on DeFi protocol architecture—we will analyze the risks and propose an optimal solution.