word

automated market maker

AW-toh-may-tid MAR-ket MAY-ker

ˈɔːtəmeɪtɪd ˈmɑːrkɪt ˈmeɪkər

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Syllable breakdown

automatedmarketmaker

Dictionary meaning

a decentralized trading mechanism that prices assets algorithmically using a mathematical formula — most commonly the constant-product formula x×y=k — instead of matching buy and sell orders; liquidity is provided by users who deposit token pairs into pools and earn fees

Examples

The automated market maker priced the token swap using only the ratio of assets in the liquidity pool.
AMMs made it possible to trade any token pair without needing a counterparty.

Synonyms: AMM, algorithmic market maker, liquidity protocol

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