Margin Operations

Margin operations enable DeFi strategies by combining lending, borrowing, and swapping operations in atomic transactions.

Supported Operations

Core Margin Operations

Leverage - Increase position size by borrowing against collateral and reinvesting
Close - Exit leveraged positions by withdrawing collateral and repaying debt
Collateral Swap - Exchange collateral assets without closing positions
Debt Swap - Change debt composition while maintaining collateral
Position Migration - Move positions between lending protocols

Architecture Deep Dive

Composer Pattern

The 1Delta margin system is built on composer pattern that enables multi-step DeFi operations to execute atomically. The BaseComposer contract serves as the foundation, with chain-specific implementations handling protocol integrations.

abstract contract BaseComposer is
    DeadLogger,
    Swaps,
    Gen2025DexActions,
    UniversalLending,
    ERC4626Operations,
    Transfers,
    Permits,
    ExternalCall
{
    function deltaCompose(bytes calldata) external payable;
    function _deltaComposeInternal(address, uint256, uint256) internal virtual;
}

Operation Execution Flow

All margin operations follow a standardized execution pattern within the composer's main loop:

function _deltaComposeInternal(address callerAddress, uint256 currentOffset, uint256 calldataLength) internal virtual {
    while (true) {
        uint256 operation = shr(248, calldataload(currentOffset));
        currentOffset = add(1, currentOffset);

        // handle operations

        if (currentOffset >= maxIndex) break;
    }
}

Architecture Overview

Key Components

1. Flash Loan Providers

The system integrates multiple flash loan providers for optimal capital efficiency:

Morpho Blue, Aave V3, Aave V2, Balancer V2, Balancer V3, Uniswap V4

2. DEX Integration

Operations support multiple DEX aggregators and protocols:

Uniswap (v2,v3,v4), Balancer (v2,v3), GMX, Dodo, ...

3. Lending Protocol Support

Compatible with major lending protocols:

Aave (v2,v3 and forks), Compound (v2,v3 and forks), Morpho Blue

Lending Protocol Integration

Margin operations leverage the lending protocol support through the unified Lending Operations interface.

For detailed lending operation encoding and protocol-specific parameters, see the Lending Operations documentation.

Operation Command Structure

Operations are encoded using compact byte packing:

Operation Byte: [Command Type (1 byte)]
Data Bytes: [Operation-specific data]

Flash Loan Operations

Margin operations utilize flash loans through the standardized flash loan interface. The system supports multiple providers:

For detailed flash loan encoding, provider-specific parameters, and integration patterns, see the Flash Loan Operations documentation.

Technical Implementation

Operation Encoding

Operations are encoded as compact bytecode sequences:

// Example: Flash loan + swap + deposit sequence
bytes memory operation = abi.encodePacked(
    uint8(ComposerCommands.FLASH_LOAN),
    uint8(FlashLoanIds.MORPHO_BLUE),
    address(asset),
    address(provider),
    uint128(amount),
    uint16(callbackData.length),
    uint8(poolId),
    callbackCallData
);

Security Architecture

Access Control

Caller Validation: Strict validation of operation initiators
Callback Verification: Flash loan callbacks validate caller addresses

Slippage Protection

Built-in slippage checks ensure operations meet minimum requirements:

assembly {
    if gt(minimumAmountReceived, amountIn) {
        mstore(0x0, SLIPPAGE)
        revert(0x0, 0x4)
    }
}

Gas Optimization Strategies

1. Packed Encoding

Minimize calldata size through tight byte packing
Use uint128 for amounts, uint16 for lengths
Combine related operations in single calls

2. Approval Management

One-time maximum approvals reduce future gas costs
Pre-approve operations outside flash loan callbacks
Use permit signatures where supported

3. Direct Transfers

Route funds directly between operations
Eliminate intermediate token movements
Use contract balance operations when possible

Quick Start Examples

Basic Leverage Operation

// 1. Setup composer and addresses
IComposer composer = IComposer(composerAddress);

// 2. Encode flash loan operation
bytes memory flashLoan = abi.encodePacked(
    uint8(ComposerCommands.FLASH_LOAN),
    uint8(FlashLoanIds.MORPHO_BLUE),
    address(USDC),
    morphoBlueAddress,
    uint128(8000e6),
    uint16(innerOps.length),
    uint8(0), // pool ID
    innerOps
);

// 3. Execute operation
composer.deltaCompose(flashLoan);

Multi-Protocol Operation

// Combine operations across protocols
bytes memory multiProtocolOps = abi.encodePacked(
    // Aave V3 deposit
    abi.encodePacked(
        uint8(ComposerCommands.LENDING),
        uint8(LenderOps.DEPOSIT),
        uint16(LenderIds.AAVE_V3),
        address(WETH),
        uint128(0),
        userAddress,
        aaveV3Pool
    ),
    // Morpho flash loan
    abi.encodePacked(
        uint8(ComposerCommands.FLASH_LOAN),
        uint8(FlashLoanIds.MORPHO_BLUE),
        address(USDC),
        morphoAddress,
        uint128(amount),
        uint16(callbackOps.length),
        uint8(0),
        callbackOps
    )
);

Integration Requirements

Prerequisites

EOA Approval: User must approve composer for token operations
Protocol Permissions: Enable composer on target lending protocols
Flash Loan Access: Ensure flash loan providers are accessible

External Data Requirements

For swap operations, provide aggregator data as:

calldata - Raw transaction data from aggregator API
target - DEX router or aggregator contract address
value - ETH value for transaction (typically 0)

Next Steps

Explore specific operation types:

Leverage Operations - Position amplification
Close Operations - Position exit strategies
Collateral Swaps - Asset rebalancing
Debt Swaps - Liability management
Position Migration - Cross-protocol transfers

Margin