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Automated Market Maker (AMM)

Automated Market Maker (AMM)

Last Updated: January 23, 2026

Automated Market Maker (AMM) is a decentralized protocol using algorithms to facilitate crypto trading without a traditional order book.

Automated Market Maker (AMM) is a system enabling decentralized trading by using smart contracts and liquidity pools. Instead of matching buyers with sellers, AMMs use algorithms to determine the price of assets automatically. Users provide liquidity to these pools and earn fees in return. This method allows continuous trading and eliminates the need for a centralized authority. AMMs are crucial to decentralized exchanges (DEXs), ensuring efficient, permissionless, and round-the-clock trading. Popular AMMs include platforms like Uniswap and SushiSwap, which have revolutionized the crypto trading landscape.