What is an AMM?

What is anAMM?

This is an Article on Automated Market Makers (AMMs).





What is an AMM?

An AMM stands for Automated Market Maker which is a variation of a Decentralised Exchange (DEX). AMMs allow users to trade/swap Crypto or any other asset on the blockchain without the need for third parties or any centralised entities!

Simply put, Automated Market Maker DEXs are just a collection of smart contracts where users can deposit Crypto to provide liquidity and create liquidity pools (LPs). This is what the power of DeFi has to offer. No banks! No overpricing middlemen! Just P2P transactions!

How does an AMM work?

One frequently asked question I must answer is, “How does it know the correct pricing of each Cryptocurrency, e.g. Bitcoin $BTC?”

Well, simply put AMMs include mathematical formulas that are able to set the price accurately.

As of now, there are 3 types of DEXs: AMMs, Aggregators & Order Book DEXs. Stay tuned as we will cover the other kind of decentralised exchanges in the future. If you want some AMM DEX suggestions, check out the next part of the thread!


These are some of the top AMM DEXs and their native tokens:

Uniswap – $UNI – https://app.uniswap.org/#/?intro=true

PancakeSwap – $CAKE – https://pancakeswap.finance/?chain=eth

SushiSwap – $SUSHI – https://www.sushi.com/

Camelot DEX – $GRAIL – https://app.camelot.exchange/

If you need a hand navigating these protocols, check out my Tutorial videos on YouTube – https://www.youtube.com/@altcryptogems. Also, you can read more on Decentralised Exchanges, Liquidity Pools and everything Crypto related on my website (Linked in the next thread).


That’s it! Thanks for reading! Have a look at our Guides section for more!

If you’re interested in learning more about Web3 and getting free crypto alpha, be sure to follow me on Twitter – @AltCryptoGems.