Automated Market Maker (amm) [updated]


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Automated Market Maker (amm) [updated]

What is Automated Market Maker (amm) [updated]?

An automated market maker (AMM) is a sort of decentralized exchange (DEX) technology that prices assets using a mathematical formula. Assets are valued using a pricing algorithm rather than an order book as in a typical exchange.

Understanding Automated Market Maker (amm) [updated]

The Automated Market Maker (AMM) exchange protocol is a DeFI protocol. It is essentially a market-making bot that uses a mathematical algorithm to determine the price of a given crypto pair.

Instead of depending on order books, like traditional exchanges do, AMM relies on mathematical calculations, which may vary amongst AMM protocols. Traditional market making is a feasible option for organizations that deal in large volumes since it quotes the best price and most attractive bid-ask spread on order-book exchanges. However, the decentralized nature of AMM protocols allows any user to create new or contribute to current markets.

Typically, an exchange protocol will use a proprietary formula to calculate the price of the assets in the liquidity pool. Furthermore, there are some functional differences.

The following are some of the extant AMM protocols.

3Commas.io – A cryptocurrency trade management tool that provides DCA bots, Grid bots, Options bots, Futures bots, HODL bots, Scalper Terminal, and full Portfolio management from a single user-friendly interface.

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Damir Yalalov

Damir is the Editor/SEO/Product Lead at mpost.io. He is most interested in SecureTech, Blockchain, and FinTech startups. Damir earned a bachelor's degree in physics.

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