{"id":63682,"date":"2022-10-07T09:26:37","date_gmt":"2022-10-07T03:56:37","guid":{"rendered":"https:\/\/mudrex.com\/blog\/?page_id=63682"},"modified":"2022-10-26T15:27:10","modified_gmt":"2022-10-26T09:57:10","slug":"automated-market-maker-amm","status":"publish","type":"page","link":"https:\/\/mudrex.com\/blog\/glossary\/automated-market-maker-amm\/","title":{"rendered":"Automated Market Maker (AMM)"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-page\" data-elementor-id=\"63682\" class=\"elementor elementor-63682\">\n\t\t\t\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-0b8cb28 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"0b8cb28\" data-element_type=\"section\" id=\"navigation-sample-sec\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column 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href=\"https:\/\/mudrex.com\/blog\/market-update\/\" class=\"elementor-item\" tabindex=\"-1\">Market Updates<\/a><\/li>\n<li class=\"menu-item menu-item-type-taxonomy menu-item-object-category menu-item-70587\"><a href=\"https:\/\/mudrex.com\/blog\/category\/product-updates\/\" class=\"elementor-item\" tabindex=\"-1\">Product-updates<\/a><\/li>\n<\/ul>\t\t\t<\/nav>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-622a9df elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"622a9df\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-e72dd12\" data-id=\"e72dd12\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-68e8c7b elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"68e8c7b\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-3513f93\" data-id=\"3513f93\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t\t\t<div class=\"elementor-element elementor-element-eac81f6 elementor-widget elementor-widget-heading\" data-id=\"eac81f6\" data-element_type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.18.0 - 20-12-2023 *\/\n.elementor-heading-title{padding:0;margin:0;line-height:1}.elementor-widget-heading .elementor-heading-title[class*=elementor-size-]>a{color:inherit;font-size:inherit;line-height:inherit}.elementor-widget-heading .elementor-heading-title.elementor-size-small{font-size:15px}.elementor-widget-heading .elementor-heading-title.elementor-size-medium{font-size:19px}.elementor-widget-heading .elementor-heading-title.elementor-size-large{font-size:29px}.elementor-widget-heading .elementor-heading-title.elementor-size-xl{font-size:39px}.elementor-widget-heading .elementor-heading-title.elementor-size-xxl{font-size:59px}<\/style><h2 class=\"elementor-heading-title elementor-size-default\">Automated Market Maker (AMM)<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1bafcd8 elementor-widget elementor-widget-text-editor\" data-id=\"1bafcd8\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t<style>\/*! elementor - v3.18.0 - 20-12-2023 *\/\n.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:#69727d;color:#fff}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap{color:#69727d;border:3px solid;background-color:transparent}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap{margin-top:8px}.elementor-widget-text-editor:not(.elementor-drop-cap-view-default) .elementor-drop-cap-letter{width:1em;height:1em}.elementor-widget-text-editor .elementor-drop-cap{float:left;text-align:center;line-height:1;font-size:50px}.elementor-widget-text-editor .elementor-drop-cap-letter{display:inline-block}<\/style>\t\t\t\t<p><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;In layman's terms, an automated market maker (AMM) is a type of decentralized exchange (DEX) wherein the fundamental difference lies in the use of mathematical formulas by the automated market makers (AMM) to calculate the rate as compared to the order books on traditional crypto exchanges. AMMs were first implemented by Shearson Lehman Brothers and ATD in the early 1990s, and, since then, they have never lost their popularity. Before the invention of automated market makers (AMM), order books were often created by humans who would initiate trades manually to enhance the liquidity of the market. \\n\\nThis process would often lead to some slippage as well as a lag in the discovery of prices on the markets. Apart from all this, market makers were often accused of tampering with the market prices. AMMs came in handy to resolve every issue about the manual market makers. Blockchain-based decentralized exchanges also use this type of system. \\n\\nIn AMM-based decentralized exchanges, liquidity pools often replace the traditional order books. These liquidity pools are pre-funded on-chain for both the assets present in the trading pair. Wondering where this liquidity comes from? The liquidity is often provided by various users who can also earn passive income through their deposits. Depending on the percentage of the liquidity provided by them, they earn passive income from trading fees. \\n\\nUniswap is one of the leading examples of decentralized exchanges that have implemented AMM. Uniswap allows all its users to exchange among various crypto assets and incentivizes supplying liquidity by allowing them to earn passive income.&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15213,&quot;3&quot;:{&quot;1&quot;:0},&quot;5&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;6&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;8&quot;:{&quot;1&quot;:[{&quot;1&quot;:2,&quot;2&quot;:0,&quot;5&quot;:{&quot;1&quot;:2,&quot;2&quot;:0}},{&quot;1&quot;:0,&quot;2&quot;:0,&quot;3&quot;:3},{&quot;1&quot;:1,&quot;2&quot;:0,&quot;4&quot;:1}]},&quot;9&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">In layman&#8217;s terms, an automated market maker (AMM) is a type of decentralized exchange (DEX) wherein the fundamental difference lies in the use of mathematical formulas by the automated market makers (AMM) to calculate the rate as compared to the order books on traditional crypto exchanges. AMMs were first implemented by Shearson Lehman Brothers and ATD in the early 1990s, and, since then, they have never lost their popularity. Before the invention of automated market makers (AMM), order books were often created by humans who would initiate trades manually to enhance the liquidity of the market. <br \/><br \/>This process would often lead to some slippage as well as a lag in the discovery of prices on the markets. Apart from all this, market makers were often accused of tampering with the market prices. AMMs came in handy to resolve every issue about the manual market makers. Blockchain-based decentralized exchanges also use this type of system. <br \/><br \/>In AMM-based decentralized exchanges, liquidity pools often replace the traditional order books. These liquidity pools are pre-funded on-chain for both the assets present in the trading pair. Wondering where this liquidity comes from? The liquidity is often provided by various users who can also earn passive income through their deposits. Depending on the percentage of the liquidity provided by them, they earn passive income from trading fees. <br \/><br \/>Uniswap is one of the leading examples of decentralized exchanges that have implemented AMM. Uniswap allows all its users to exchange among various crypto assets and incentivizes supplying liquidity by allowing them to earn passive income.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Automated Market Maker (AMM) In layman&#8217;s terms, an automated market maker (AMM) is a type of decentralized exchange (DEX) wherein the fundamental difference lies in the use of mathematical formulas by the automated market makers (AMM) to calculate the rate as compared to the order books on traditional crypto exchanges. AMMs were first implemented by [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"parent":61790,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"elementor_header_footer","meta":{"_eb_attr":"","footnotes":""},"_links":{"self":[{"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/pages\/63682"}],"collection":[{"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/comments?post=63682"}],"version-history":[{"count":5,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/pages\/63682\/revisions"}],"predecessor-version":[{"id":65001,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/pages\/63682\/revisions\/65001"}],"up":[{"embeddable":true,"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/pages\/61790"}],"wp:attachment":[{"href":"https:\/\/mudrex.com\/blog\/wp-json\/wp\/v2\/media?parent=63682"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}