Dec 5, 2022 • 5M

Episode 54 - Automated Market Makers (AMM)

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Gautam Dhameja
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Episode details

In this episode, we cover Automated Market Makers or AMMs.

Traditionally exchanges are based on order books. Buyers and sellers are matched with quantity and price in their orders.

AMMs are different. They use a conversion formula for trades. They use decentralized liquidity pools for liquidity.

Any user can send one asset and get another asset from AMM, as long as there is a liquidity pool with enough liquidity in it.