Automated Market Maker (AMM)

An Automated Market Maker (AMM) is a type of decentralized exchange that allows individuals to trade cryptocurrencies without a traditional order book. Instead of matching buyers and sellers directly, an AMM uses smart contracts and algorithms to automatically provide liquidity by maintaining a pool of assets. Users can swap different cryptocurrencies by interacting with this pool. Prices adjust based on supply and demand, allowing for continuous trading while helping liquidity providers earn fees for their contributions. This system enables greater accessibility and efficiency in trading digital assets.