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DeFiA

AMM

Automated Market Maker — a type of DEX protocol that uses mathematical formulas (like x*y=k) to price assets instead of an order book. Examples include Uniswap and Curve. AMMs allow anyone to become a liquidity provider by depositing tokens into a pool, earning trading fees in return, though they carry risks such as impermanent loss.

Example

I swapped ETH for USDC through an AMM on Uniswap with minimal slippage thanks to the pool's deep liquidity.