Automated Market Makers (AMM)
Algorithms that set asset prices and enable trading without relying on traditional order books or intermediaries.
Automated Market Makers (AMMs) are decentralized exchange protocols that enable trading of digital assets without a traditional order book. AMMs use a mathematical formula to price assets, typically utilizing liquidity pools comprised of token pairs. Users can trade against these pools, with prices adjusting according to the pool's balance. This mechanism facilitates continuous liquidity and allows users to earn fees by providing liquidity. AMMs have become a fundamental component of decentralized finance (DeFi), offering seamless and permissionless trading experience.
Last updated