The digital era · 2000–today
2017–2018
Automated market makers
Crypto exchanges price trades by formula instead of matching orders.
Around 2017, developers described bonding curves, formulas that set a token's price from how many are in circulation. In November 2018 Uniswap launched an exchange that priced trades with a constant-product formula, with no order book.
💡 Why it made sense then
Without a company matching buyers and sellers, a formula could always quote a price.
Ideas it gave us
- 🧾 Automated market maker (AMM)
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.
- 🧾 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.
Practise with $10,000 in play money
Free. No real money involved.