Automated Market Maker (AMM)

An Automated Market Maker (AMM) refers to a decentralized exchange (DEX) that operates fully automatically. In an AMM, trading is conducted against liquidity pools that consist of different tokens. These pools are regulated by algorithms, which control the values and prices of the tokens within them. Unlike conventional exchanges, AMMs do not rely on the presence of active buyers and sellers in the market. As a result, trades can be executed at any time. Well-known AMMs include Uniswap, Curve, and Balancer.