Essential Concepts

WETH vs Native ETH

Important Protocol Limitation: UNIKRON does not support native ETH as a sellToken parameter. All ETH positions must be converted to WETH (Wrapped Ether) prior to execution.

Asset Type	Contract Address	Swap Eligibility	Required Action
Native ETH	0x0000000000000000000000000000000000000000	Not Supported	Convert to WETH
WETH (ERC-20)	0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2	Supported	Direct usage

Technical Rationale:

Native ETH operates outside the ERC-20 token standard and requires special handling for smart contract interactions. WETH provides ERC-20 compliance while maintaining a 1:1 peg with ETH through a deposit/withdrawal mechanism, enabling standardized DEX integration.

How to Wrap ETH to WETH

Use UNIKRON’s wrap endpoint to convert ETH to WETH before trading:


// Use our wrap endpoint
const wrapQuote = await fetch(`${API_URL}/api/v1/mev/wrap/quote`, {
  method: "POST",
  headers: { "X-API-Key": API_KEY, "Content-Type": "application/json" },
  body: JSON.stringify({
    direction: "wrap",
    amount: "1000000000000000000", // 1 ETH
    userAddress: yourAddress,
  }),
});
 
// Sign and submit (same as regular swap)
const signedTx = await signer.signTransaction(wrapQuote.data.transactionParams);
await fetch(`${API_URL}/api/v1/mev/wrap/order`, {
  method: "POST",
  body: JSON.stringify({ signedTransaction: signedTx }),
});

ERC-20 Token Approvals

Definition: Token approvals grant smart contracts permission to transfer ERC-20 tokens on behalf of the token holder, as specified in the EIP-20 standard.

Approval Requirements: Approvals are required when:

Trading a token for the first time
Interacting with a new router contract
Existing allowance is insufficient for transaction amount

Detailed Implementation: See Step 3: Token Approval for complete integration guide.

Reference Implementation:


// Allowance verification
const currentAllowance = await tokenContract.allowance(
  userAddress,
  routerAddress
);
 
if (currentAllowance.lt(transactionAmount)) {
  // Execute approval transaction
  const approveTx = await tokenContract.approve(
    routerAddress,
    ethers.MaxUint256 // Or specific amount per security policy
  );
  await approveTx.wait(); // Mandatory: Wait for confirmation
}

Important: All token movements must be properly authorized through on-chain approval mechanisms as per standard operating procedures.

Slippage Tolerance

Definition: Slippage represents the differential between expected execution price at quote time and actual execution price at settlement time, caused by market volatility and liquidity depth changes.

Example Scenario:

Metric	Value
Expected output	3,700 USDC
Actual output	3,681 USDC
Slippage	19 USDC (0.51%)

Built-in Protection Mechanism

UNIKRON implements automatic slippage protection via the minBuyAmount parameter:

Default tolerance: 0.6% (60 basis points)
Transactions revert if output < minBuyAmount
No user funds at risk on excessive slippage
Adheres to institutional best execution standards

Implementation: Slippage protection is automatically applied to all quotes. No additional configuration required.

Price Impact

Definition: Price impact quantifies how a trade size affects the market exchange rate due to available liquidity constraints. Larger trades relative to pool depth result in higher price impact.

Impact Assessment Guidelines:

Impact Level	Basis Points	Risk Assessment	Recommended Action
Low	< 100 bps (1%)	Acceptable	Execute as planned
Medium	100-300 bps (1-3%)	Elevated	Consider trade splitting
High	> 300 bps (3%)	Significant	Reassess trade size

Quote Response Field: Price impact is returned as priceImpact (decimal format, e.g., 0.12 = 0.12%)

Mitigation Strategies

How to Minimize Price Impact:

Trade Splitting: Divide large orders into smaller tranches executed over time
Route Optimization: UNIKRON automatically routes to minimize price impact
Alternative Pairs: Consider trading through intermediate tokens with deeper liquidity
Time Distribution: Execute during periods of higher market liquidity