An AMM, or automated market maker, is a DEX design that uses liquidity pools and formulas instead of a traditional order book.
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Short definition
AMM is an AMM, or automated market maker, is a DEX design that uses liquidity pools and formulas instead of a traditional order book.
Simple explanation
AMMs allow users to trade against pools of tokens supplied by liquidity providers.
Why it matters
AMMs explain why liquidity, slippage, price impact, and pool reserves matter in DEX trading.
Example context
A token pair pool may allow swaps between Token A and Token B using an AMM formula.