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What is an automated market maker (AMM)?
What is an automated market maker (AMM)?
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Written by Avalanche
Updated over a week ago

Automated market makers (AMMs) allow digital assets to be traded in a permissionless and automatic way by using liquidity pools rather than a traditional market of buyers and sellers.

On AMMs, users supply liquidity of digital assets. These assets are then added to a liquidity pool. Prices between asset pairs are determined by a constant mathematical formula.

This new method of exchanging assets embodies the ideals of crypto in general: no one entity controls, everyone can participate, and anyone can build on top of another.

For any additional questions, please view our other knowledge base articles or contact a support team member via the chat button. Examples are for illustrative purposes only.

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