DeFi & Protocols
Also: AMM
Automated Market Maker AMM
A decentralized exchange mechanism that uses liquidity pools and mathematical formulas instead of order books.
An automated market maker replaces the traditional buyer-seller order book with smart contract-managed liquidity pools. Prices are determined algorithmically — typically using the constant product formula (x × y = k) — rather than matched orders. Users who deposit assets into a pool earn trading fees proportional to their share; Uniswap pioneered the AMM model that now underlies most decentralized exchanges.
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