Automated Market Makers (AMMs)

Automated Market Makers (AMMs) are decentralized trading systems that allow users to swap cryptocurrencies without traditional order books or intermediaries. They rely on smart contracts and liquidity pools—funds contributed by users—to facilitate trades automatically based on predefined mathematical formulas. When you trade, the AMM adjusts the pool’s asset ratios to find the best price, enabling continuous liquidity. This setup removes the need for a broker or matched buyer/seller, making decentralized exchanges more efficient, open, and accessible for anyone to participate in crypto trading.