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What Is an Automated Market Maker (AMM) and How Does It Relate to Smart Contracts?

An AMM is a smart contract that uses a mathematical formula and a liquidity pool to facilitate automated, decentralized trading.
Greeks.Live06.11.25

What Is an Automated Market Maker (AMM) and How Does It Relate to Smart Contracts?

An AMM is a smart contract that holds a pool of tokens and uses a mathematical formula to determine the price of assets. It facilitates decentralized trading without the need for a traditional order book or intermediaries.

Users trade against the pool, and the smart contract automatically executes the swap based on the liquidity and the formula.

How Does an AMM Differ from a Centralized Exchange (CEX)?
What Is an Automated Market Maker (AMM) and How Does It Differ from a Traditional Order Book?
How Is the Price of a Token Determined within a Liquidity Pool?
How Does a Constant Product Formula (X Y=k) Govern the Price in a DEX Smart Contract?

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