• About Us
  • Disclaimer
  • Privacy Policy
  • Contact Us
Best Digital Mate
  • Home
  • Business
    • All
    • Cryptocurrency
    • finance
    Commercial Finance Lenders

    5 Qualities to Look for When Partnering With Commercial Finance Lenders

    Advancements in Digital Licensing Fueled by Bitcoin

    Advancements in Digital Licensing Fueled by Bitcoin

    Navigating the Market: Strategies for Swift Business Idea Validation

    Navigating the Market: Strategies for Swift Business Idea Validation

    Data Preservation and Digital Yuan: China's Synergetic Approach

    Data Preservation and Digital Yuan: China’s Synergetic Approach

    Why should you invest in Tata Motors Shares?

    Why should you invest in Tata Motors Shares?

    Bitcoin Investment Progress for this Decade in Seychelles

    Bitcoin Investment Progress for this Decade in Seychelles

    Trending Tags

    • Market Stories
    • Bitcoin
    • Litecoin
    • Harbolnas
    • United Stated
    • finance
  • Digital Marketing
    • SEO
  • Technology
  • Health
  • Travel
  • Education
  • Gaming
  • Real Estate
  • More
    • Gadgets
    • Event
    • Entertainment
      • All
      • Celebrity
      13377x Movies

      13377x Search Engine for Movies, Games, Software, Applications in 2024

      EZTV Proxy Sites to Watch Your Favourite Content in 2022

      EZTV Proxy Sites to Watch Your Favourite Content in 2024

      Moviescouch website 2021

      MoviesCouch Website 2024 for Latest Hindi Movies download

      1337x Proxy Site List in 2022: Free Access to Premium Content

      1337x Proxy Site List in 2024: Free Access to Premium Content

      Faverou app

      The Loveliest Masterpiece of God’s Heart- The Heart of a Mother

      Movierulz ps Website for Telugu Movies, TV Shows and Webseries in 2023

      Movierulz ps Website for Telugu Movies, TV Shows and Webseries in 2023

      Trending Tags

      • Golden Globes 2018
      • Grammy Awards
      • Explore Bali
      • Champions League
      • Harbolnas
    • Electronics
    • Training
    • Outdoor
    • Fashion & Beauty
    • Lifestyle
No Result
View All Result
  • Home
  • Business
    • All
    • Cryptocurrency
    • finance
    Commercial Finance Lenders

    5 Qualities to Look for When Partnering With Commercial Finance Lenders

    Advancements in Digital Licensing Fueled by Bitcoin

    Advancements in Digital Licensing Fueled by Bitcoin

    Navigating the Market: Strategies for Swift Business Idea Validation

    Navigating the Market: Strategies for Swift Business Idea Validation

    Data Preservation and Digital Yuan: China's Synergetic Approach

    Data Preservation and Digital Yuan: China’s Synergetic Approach

    Why should you invest in Tata Motors Shares?

    Why should you invest in Tata Motors Shares?

    Bitcoin Investment Progress for this Decade in Seychelles

    Bitcoin Investment Progress for this Decade in Seychelles

    Trending Tags

    • Market Stories
    • Bitcoin
    • Litecoin
    • Harbolnas
    • United Stated
    • finance
  • Digital Marketing
    • SEO
  • Technology
  • Health
  • Travel
  • Education
  • Gaming
  • Real Estate
  • More
    • Gadgets
    • Event
    • Entertainment
      • All
      • Celebrity
      13377x Movies

      13377x Search Engine for Movies, Games, Software, Applications in 2024

      EZTV Proxy Sites to Watch Your Favourite Content in 2022

      EZTV Proxy Sites to Watch Your Favourite Content in 2024

      Moviescouch website 2021

      MoviesCouch Website 2024 for Latest Hindi Movies download

      1337x Proxy Site List in 2022: Free Access to Premium Content

      1337x Proxy Site List in 2024: Free Access to Premium Content

      Faverou app

      The Loveliest Masterpiece of God’s Heart- The Heart of a Mother

      Movierulz ps Website for Telugu Movies, TV Shows and Webseries in 2023

      Movierulz ps Website for Telugu Movies, TV Shows and Webseries in 2023

      Trending Tags

      • Golden Globes 2018
      • Grammy Awards
      • Explore Bali
      • Champions League
      • Harbolnas
    • Electronics
    • Training
    • Outdoor
    • Fashion & Beauty
    • Lifestyle
No Result
View All Result
Best Digital Mate
No Result
View All Result
Home Business finance

Automated Market Makers and Decentralized Exchanges

Admin by Admin
April 6, 2022
in finance, Business
0
Automated Market Makers and Decentralized Exchanges
587
SHARES
3.3k
VIEWS
Share on FacebookShare on Twitter

Automated market makers present a novel aspect to trading digital assets that were previously non-existent. This novel approach has enabled decentralized exchanges such as Uniswap, Saddle Finance, and Balancer to achieve token swaps in a non-custodial manner and without compromising decentralization.

While order book-based decentralized exchanges (DEX) of previous generations of DeFi (decentralized finance) struggled with providing sufficient and reliable levels of liquidity to users, AMM-based DEXs are changing the narrative in a big way. In one case, the trading volume on Uniswap even managed to surpass that of centralized and established platforms such as Coinbase.

Simply put, AMM protocols operate as the engine underneath the hood of nearly every DEX in the DeFi landscape at the moment. Granted, there are different types of AMM protocols deployed across a variety of DeFi applications. However, the most common AMM protocol remains to be the swapping protocol that powers DEXs such as Uniswap, SushiSwap, and every other DEX in between.

Here is a primer on AMM protocols and how they are deployed on decentralized exchanges.

What is an AMM Protocol?

To begin with, an AMM (automated market-making) protocol is simply a software algorithm that can be programmed into a smart contract to provide a formula for that smart contract to make markets automatically.

In the world of finance, a market only exists if two parties are involved thus making up the buyer and the seller. As expected, each of these two parties is guided by selfish incentives where the buyer is looking to purchase at the lowest price possible, and the seller is looking to sell the digital asset at the highest price possible. 

However, the trade can only take place once the two parties agree on a price in the middle. Once the parties agree on a price, the trade is fulfilled, and a price for the asset is set.

However, what happens when there is a buyer but no seller to match or when there is a seller with no buyers? Well, this is where market makers come in. Essentially, a market maker’s job is to make sure that both sides of the trade are always fulfilled by providing liquidity on both sides. 

Liquidity simply refers to the ease with which an asset can be exchanged for other assets. The market maker’s job is to offer high levels of liquidity; therefore, the buyer and the seller can be sure of fulfilling their trades even when there is no person on the other side of the trade.

How AMM Protocols Operate on DEXs

Given that an exchange platform’s main job is to offer its users reliable access to liquidity, decentralized exchanges have for a long time struggled to find a decentralized method of offering liquidity. For the most part, DEXs have relied on order books that try to mimic the format used on centralized exchanges but with some DeFi tools. 

AMM-based DEXs on the other hand take the concept of decentralization to a whole new level. Using an AMM  technology programmed into a smart contract that controls a liquidity pool, DEXs are now able to facilitate the exchange of one token with the other on a fully decentralized framework.

The AMM protocol in the smart contract is programmed to monitor the supply of tokens in the liquidity pool and balance out the equation to determine the price of assets in the pool based on demand and supply.

The Constant Product AMM for instance is designed to maintain an equal ratio of both tokens in the liquidity pool. This means that the price of one token is bound to rise as demand goes up, and it will fall as demand decreases.

Tags: AMM ProtocolsAutomated marketdecentralized exchangesdecentralized framework
Previous Post

9 Benefits of Working with AdLift: A Premium SEO Agency in India

Next Post

So können die Gewinnchancen im Casino erhöht werden

Admin

Admin

Related Posts

Commercial Finance Lenders
Business

5 Qualities to Look for When Partnering With Commercial Finance Lenders

by Daniel Watson
May 22, 2024
Advancements in Digital Licensing Fueled by Bitcoin
Cryptocurrency

Advancements in Digital Licensing Fueled by Bitcoin

by Admin
March 16, 2024
Navigating the Market: Strategies for Swift Business Idea Validation
Business

Navigating the Market: Strategies for Swift Business Idea Validation

by Admin
December 13, 2023
Data Preservation and Digital Yuan: China's Synergetic Approach
Cryptocurrency

Data Preservation and Digital Yuan: China’s Synergetic Approach

by Ester Adams
October 22, 2023
Next Post
So können die Gewinnchancen im Casino erhöht werden

So können die Gewinnchancen im Casino erhöht werden

7 Effective Soft Skills For Teachers

7 Effective Soft Skills For Teachers

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *


The reCAPTCHA verification period has expired. Please reload the page.

ADVERTISEMENT

Recommended

Online Photo editor

Appy Pie Online Photo Editor – Make Your Photos Look Flawless

May 16, 2021
Air Conditioner brands

Air Conditioner brands that have always been on the top for last 5 years

June 18, 2021
Are Lower Car Insurance Prices Good for You

Are Lower Car Insurance Prices Good for You

May 25, 2022
Fashion Tips: How to Coordinate Your Wedding Outfits

Fashion Tips: How to Coordinate Your Wedding Outfits

October 26, 2022
Benefits of Press Release Distribution for Your Business

Benefits of Press Release Distribution for Your Business

February 8, 2022

Categories

  • Automobile
  • Business
  • Celebrity
  • Cryptocurrency
  • Digital Marketing
  • Education
  • Electronics
  • Entertainment
  • Event
  • Fashion & Beauty
  • finance
  • Food and Drink
  • Gadgets
  • Gaming
  • General
  • Health
  • Home improvement
  • Internet
  • Law
  • Lifestyle
  • Outdoor
  • Pet
  • Photography
  • Real Estate
  • SEO
  • Technology
  • Training
  • Travel

Don't miss it

12 Top Features to Look for in a Crowd Testing Platform
Technology

12 Top Features to Look for in a Crowd Testing Platform

January 27, 2025
The Complete Wall art Guide According to Different Types
Home improvement

The Complete Wall art Guide According to Different Types

January 23, 2025
The Importance of Quality Assurance in Software Development
Technology

The Importance of Quality Assurance in Software Development

October 16, 2024
Benefits of Using Portable Document Format (PDF)
Technology

Benefits of Using Portable Document Format (PDF)

October 11, 2024
LinkedIn Automation: The Best Zopto Alternatives in 2024-2025
Technology

LinkedIn Automation: The Best Zopto Alternatives in 2024-2025

September 24, 2024
Configuring SMTP Settings in Magento 2: Enhancing Email Delivery
Technology

Configuring SMTP Settings in Magento 2: Enhancing Email Delivery

June 25, 2024
best digital mate_mobile

Welcome to Best Digital Mate, your number one source for all information about Digital Marketing, Events, Health and Fitness, Technology, Travel, Fashion & Beauty, Gadgets and more. We’re dedicated to giving you the very best information about all these categories, with a focus on quality, relevancy and timely update.

Contact: [email protected]

Categories

  • Automobile
  • Business
  • Celebrity
  • Cryptocurrency
  • Digital Marketing
  • Education
  • Electronics
  • Entertainment
  • Event
  • Fashion & Beauty
  • finance
  • Food and Drink
  • Gadgets
  • Gaming
  • General
  • Health
  • Home improvement
  • Internet
  • Law
  • Lifestyle
  • Outdoor
  • Pet
  • Photography
  • Real Estate
  • SEO
  • Technology
  • Training
  • Travel

Recent News

12 Top Features to Look for in a Crowd Testing Platform

12 Top Features to Look for in a Crowd Testing Platform

January 27, 2025
The Complete Wall art Guide According to Different Types

The Complete Wall art Guide According to Different Types

January 23, 2025

Contact Us

    • About Us
    • Contact Us
    • Disclaimer
    • Home
    • Privacy Policy

    © 2021 bestdigitalmate.com. All rights reserved.

    No Result
    View All Result
    • Home
    • Technology
    • Gadgets
    • Digital Marketing
    • Fashion & Beauty
    • Business
    • Event
    • Travel
    • Entertainment
    • Lifestyle
    • Lifestyle
    • Health
    • Electronics

    © 2021 bestdigitalmate.com. All rights reserved.