AMM
MarketsDefinition
Automated Market Maker. A DEX design where prices are set by a mathematical formula based on the ratio of two assets in a liquidity pool, rather than an orderbook.
Uniswap v2: x*y=k constant-product. Uniswap v3: concentrated liquidity (LPs choose price ranges). Curve: stableswap formula for low-slippage stable pairs. Trade-offs: simpler than orderbooks but suffers from impermanent loss.
Uniswap v2: x*y=k constant-product. Uniswap v3: concentrated liquidity (LPs choose price ranges). Curve: stableswap formula for low-slippage stable pairs. Trade-offs: simpler than orderbooks but suffers from impermanent loss.