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What Is the Role of an Automated Market Maker (AMM) in a DEX?

An algorithm that manages liquidity pools and determines prices, replacing the traditional order book.
Greeks.Live17.11.25

What Is the Role of an Automated Market Maker (AMM) in a DEX?

An AMM is a protocol that manages liquidity pools and determines asset prices using a mathematical formula, typically x y = k. It replaces the traditional order book of a centralized exchange.

It allows users to trade without needing a direct counterparty, enabling permissionless listing and trading, which is the core functionality of a DEX.

What Is the Difference between an AMM and a Central Limit Order Book (CLOB)?
What Is the Difference between an Order Book DEX and an AMM-based DEX?
What Is the Primary Function of an Automated Market Maker (AMM) in Decentralized Finance (DeFi)?
How Does the Lack of a Central Order Book on an Automated Market Maker (AMM) DEX Change the Nature of Front-Running?

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