What are Automated Market Makers (AMMs)?
AMMs are protocols used in decentralized exchanges (DEXs) to facilitate asset trading without relying on centralized intermediaries or traditional order books. Instead of matching buyers and sellers directly, AMMs rely on liquidity pools—smart contract-based reserves containing token pairs. Traders swap tokens within these pools, with prices determined algorithmically based on the pool’s token ratio.
This innovation ensures that trading is always available, even for less liquid pairs, reducing reliance on centralized exchanges. AMMs are the foundation for many DEXs, including Uniswap, PancakeSwap, SushiSwap, Curve Finance








