What is an Automated Market Maker (AMM) and How Do They Work?

What is an Automated Market Maker (AMM)? An automated market maker (AMM) is a decentralized exchange (DEX) protocol that utilizes a mathematical formula to determine asset prices. Unlike traditional exchanges that rely on order books, AMMs employ a pricing algorithm. The specific formula employed can differ across protocols. For instance, Uniswap utilizes the equation x…

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