Automated Market Makers
Constant product formula.
What Is an AMM?
An Automated Market Maker (AMM) is a smart contract that prices and executes trades using a mathematical formula instead of an order book.
Instead of matching a buyer with a seller, traders swap against a shared pool of tokens.
Order Books vs AMMs
Traditional exchanges match individual buy and sell orders. AMMs replace that with a liquidity pool and a pricing curve.
- Order book: needs active market makers
- AMM: always available, prices set by formula
All lessons in this course
- DeFi Overview
- Automated Market Makers
- Liquidity Pools
- Building a Simple Swap