System and method for smart order routing and automatic market maker path determination in a decentralized market

A non-transitory computer-readable medium storing instructions that, when executed by one or more computer processors of a computing platform, cause the computing platform to perform operations comprising:

• connecting to a DLT source, thereby retrieving DLT source state data and monitoring real-time blockchain state changes;
• constructing, from the DLT source state data, a reference graph, comprising nodes and edges, wherein each node represents a token on the DLT source and has a non-negative token value, and wherein a start token is the only token that has an initial positive token value, and wherein each edge connects a pair of neighboring nodes and represents a state-dependent automatic market maker (AMM) function that updates as tokens are exchanged through the liquidity pool and is dependent on token properties including smart contract rules;
• determining traversal hyperparameters for the reference graph, including
• determining a maximum number of steps, corresponding to a maximum number of path steps that can be taken for a swap path to traverse the reference graph from the start token to a target token, and
• determining a blockchain state change time frame comprising a time period until the DLT source state is updated;
• at a processor system configured to perform iterative processing, iteratively traversing the reference graph graph within the blockchain state change time frame, therein calculating swap efficiencies for swap paths between the start token and the target token, wherein each iteration comprises:
• from the start token to the target token, executing all swap paths, wherein each swap path includes fewer intermediary nodes than the maximum number of steps and wherein executing swap paths comprises applying the state-dependent AMM functions, and
• for all swap paths, determining a swap efficiency;
• and
• determining a select swap path based on all swap efficiencies within the blockchain state change time frame.

A system comprising of:

• one or more computer-readable mediums storing instructions that, when executed by the one or more computer processors, cause a computing platform to perform operations comprising:
• connecting to a DLT source, thereby retrieving DLT source state data and monitoring real-time blockchain state changes;
• constructing, from the DLT source state data, a reference graph, comprising nodes and edges, wherein each node represents a token on the DLT source and has a non-negative token value, and wherein a start token is the only token that has an initial positive token value, and wherein each edge connects a pair of neighboring nodes and represents a state-dependent automatic market maker (AMM) function that updates as tokens are exchanged through the liquidity pool and is dependent on token properties including smart contract rules;
• determining traversal hyperparameters for the reference graph, including
• determining a maximum number of steps, corresponding to a maximum number of path steps that can be taken for a swap path to traverse the reference graph from the start token to a target token, and
• determining a blockchain state change time frame comprising a time period until the DLT source state is updated;
• at a processor system configured to perform iterative processing, iteratively traversing the reference graph within the blockchain state change time frame, therein calculating swap efficiencies for swap paths between the start token and the target token, wherein each iteration comprises:
• from the start token to the target token, executing all swap paths, wherein each swap path includes fewer intermediary nodes than the maximum number of steps, and wherein executing swap paths comprises applying the state-dependent AMM functions, and
• for all swap paths, determining a swap efficiency;
• and
• determining a select swap path based on all swap efficiencies within the blockchain state change time frame.