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What is an AMM?

Automated Market Maker; a decentralized asset trading model that uses a mathematical formula to price assets.

Key details

Liquidity Pools
Uses pools of tokens to facilitate trades.
Constant Product Formula
Most common AMMs use x * y = k formula.
Passive Market Making
Liquidity providers can earn fees without active trading.
Slippage
Large trades can result in significant price slippage.

Examples

  1. 01Uniswap's x * y = k model for token swaps.
  2. 02Curve Finance's stable swap AMM optimized for similar assets.
  3. 03Balancer's generalized n-token pool AMM.