Automated market maker (AMM)
Also called: AMM, market maker
An automated market maker is a pricing formula that always quotes a price to buy or sell, instead of matching buyers with sellers in an order book.
Traditional market makers are firms that post both bids and asks and profit from the spread. AMMs do the same with a formula, and are common in decentralized finance.
Related terms
- Bonding curve: A bonding curve is a formula that sets an asset's price from how many units are in circulation, so each purchase raises the price and each sale lowers it.
- Order book: An order book is the live list of buy and sell orders waiting at each price for a stock.
- Liquidity: Liquidity is how easily something can be bought or sold quickly without moving its price much.
Guides
Practise with $10,000 in play money
Free. No real money involved.
For learning only. This isn't financial advice.