Architecture

Position mechanics

Untangled Loop is deployed as two Soroban contracts working together:

• Entrypoint: per-pair strategy initiator (e.g., XLM/USDC). Builds the flash loan + request bundle.
• MarginManager: flash-loan callback handler. Executes swaps via Aquarius and leaves swapped tokens with the caller for Blend requests.

Architecture (open position)

1. User calls Entrypoint.open_long() or Entrypoint.open_short()
2. Entrypoint calls MarginManager.set_swap_config(...)
3. Entrypoint calls Blend Pool flash_loan(caller, FlashLoan{...}, requests)
4. Blend transfers flash loan tokens to MarginManager and calls MarginManager.exec_op(...)
5. MarginManager:
   • transfers flash-loaned tokens to caller
   • swaps via Aquarius using the configured route and min_amount_out
   • clears swap config
6. Blend executes requests (supply collateral, borrow, repay)
7. Position is opened

Long position

A long Base/Quote position means:

• Collateral = Base
• Debt = Quote
• Profit when Base/Quote increases

Quote currency as margin

If a trader longs Base using Quote as margin, Loop:

• flash loans Quote
• swaps Quote → Base
• supplies Base as collateral
• borrows Quote
• repays flash loan

This is implemented by:

• Entrypoint.open_long(...)
• swap config token_out = Base
• Blend requests: SUPPLY_COLLATERAL(Base), BORROW(Quote), REPAY(Quote)

Base currency as margin

If a trader longs Base using Base as margin, Loop:

• flash loans Quote
• swaps Quote → Base
• supplies (swapped Base + margin Base) as collateral (depending on margin_from_quote)
• borrows Quote
• repays flash loan

The contracts support margin being either side of the pair via margin_from_quote and initial_margin.

Short position

A short Base/Quote position means:

• Collateral = Quote
• Debt = Base
• Profit when Base/Quote decreases

Quote currency as margin

If a trader shorts Base using Quote as margin, Loop:

• flash loans Base
• swaps Base → Quote
• supplies (swapped Quote + margin Quote) as collateral
• borrows Base
• repays flash loan

This is implemented by:

• Entrypoint.open_short(...)
• swap config token_out = Quote
• Blend requests: SUPPLY_COLLATERAL(Quote), BORROW(Base), REPAY(Base)

In the UI example (XLM/USDC short):

• User inputs USDC as margin
• Loop borrows/owes XLM (debt) and holds USDC as collateral
• Leverage controls how much Base is flash loaned and swapped into additional collateral

Base currency as margin

If a trader shorts Base using Base as margin, Loop:

• flash loans Base
• swaps Base → Quote
• supplies swapped Quote as collateral
• borrows Base (reduced by margin if margin is Base)
• repays flash loan