AMM
Technology & Computing abbreviation · Cryptocurrency & Blockchain
| Stands for | Automated market maker |
|---|---|
| Categories | Technology & Computing |
AMM stands for Automated market maker, a cryptocurrency & blockchain abbreviation.
A smart-contract system that prices and executes trades using a mathematical formula and pools of tokens supplied by users, instead of matching buyers and sellers in an order book. It is the engine of most decentralized exchanges.
Example: The AMM quoted a worse price for the large trade because it shifted the pool's ratio sharply.
Usage notes
Uniswap, launched in 2018, popularized the constant product formula x * y = k. Liquidity providers earn trading fees but face impermanent loss. Later designs such as Curve's stableswap and Uniswap v3's concentrated liquidity use capital more efficiently. Price slippage grows with trade size relative to the pool.