AMM (automated market maker)
AMMautomated market maker
A smart contract that prices assets via a pricing curve over a pool of reserves rather than an order book.
AMMs let users swap tokens against a pooled reserve. Constant-product (xy=k, e.g. Uniswap v2), concentrated-liquidity (Uniswap v3), and StableSwap (Curve) are the dominant curves. AMMs are the venue most stablecoin pegs are stress-tested at — a coin that depegs on Curve has effectively depegged regardless of issuer redemption windows.
Related terms
- CurveThe largest stablecoin-focused AMM, optimised for low-slippage swaps between like-kind assets.
- Liquidity poolA pool of token reserves that a smart contract uses to facilitate swaps, lending, or other on-chain activity.
- SlippageDifference between expected and realised execution price — caused by pool depth + competing fills.
- Impermanent lossThe opportunity cost an LP incurs when pool composition rebalances toward the underperforming asset.