Automated Market Maker (AMM) Explained
There are roughly 10 million people in the world that have used DeFi. And if you’ve used DeFi, one of the first things you have done is to swap tokens on a decentralized exchange. In an exchange like Uniswap, the AMM is an algorithmic ‘money robot’ which determines the price of an asset. One of the most common and simple forms of algorithm used is the Constant Product Market Maker (CPMM):x*y = kwhere x is the amount of token A and y is the amount of token B. This function states that the prod...
Automated Market Maker (AMM) Explained
There are roughly 10 million people in the world that have used DeFi. And if you’ve used DeFi, one of the first things you have done is to swap tokens on a decentralized exchange. In an exchange like Uniswap, the AMM is an algorithmic ‘money robot’ which determines the price of an asset. One of the most common and simple forms of algorithm used is the Constant Product Market Maker (CPMM):x*y = kwhere x is the amount of token A and y is the amount of token B. This function states that the prod...
