Automated market maker
A trading mechanism that uses an algorithm and available liquidity to quote or determine exchange prices.
In more detail
An AMM doesn't need to find another person placing the exact opposite order at that moment. Its rules use available liquidity to work out a trade. Different designs use different curves or price ranges, and a large swap can move the effective price significantly. The quoted price depends on the pool you're using.
How you might use it
You increase a swap from a small amount to a much larger one, and the AMM quote worsens because that trade uses more of the pool’s liquidity.
- Short name
- AMM
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