What Is the Concept of a 'Virtual AMM' (vAMM) Used in Some Perpetual Futures Protocols? ▴ Learn

What Is the Concept of a ‘Virtual AMM’ (vAMM) Used in Some Perpetual Futures Protocols?

A Virtual AMM (vAMM) is a mechanism used in decentralized perpetual futures exchanges. Unlike a traditional AMM, a vAMM does not hold the actual underlying assets.

Instead, it uses a constant product formula to determine the price and leverage of the futures contract, but the collateral is held in a separate vault. The vAMM is a pricing mechanism only, allowing for high leverage and efficient price discovery without needing vast liquidity pools for the underlying asset.

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