AMM

An Automated Market Maker (AMM) is a system used in cryptocurrency exchanges that allows users to trade digital assets without needing a traditional order book. Instead of matching buyers and sellers directly, AMMs use smart contracts and liquidity pools—collections of funds from users—to set prices. When someone trades, the AMM adjusts prices based on the supply and demand of the assets in the pools. This method enhances liquidity, making it easier for users to buy or sell assets quickly, while also allowing liquidity providers to earn fees for contributing their funds.