What Is An Automated Market Maker and Why Does It Matter to DeFi?

benefits of AMMs

Introduction

Few Words about Liquidity Pools

What Are These Pools For?

  • Constant Function Market Maker (CFMM) is the most widespread approach. It is created specifically to provide a decentralized exchange of virtual currencies. It uses permanent functionality that works due to the full interaction of all self-executing contracts responsible for different digital assets.
  • Constant Sum Market Maker (CSMM) is designed with automatic regulation of price ranges. If the amount of assets increases, the loss of value happens both rapidly and automatically.
  • Constant Mean Market Maker (CMMM) is a more complex approach for a market maker that works with over 2 trading assets.
  • there are new trading models
  • the sliding price is minimum
  • the faster and cheaper analog of the order book
  • trading orders are delayed by milliseconds
  • better liquidity
  • the lack of bad actors manipulating the price
  • reducing exposure to price fluctuations

What is Impermanent Loss (IL)?

Concluding Thoughts

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Interoperable DeFi Liquidity Pool Platform $GENE Discord Channel: http://discord.gg/xCs7Ehy

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