An Automated Market Maker (AMM) is a decentralized exchange mechanism that uses algorithms to price assets, eliminating the need for traditional order books. In an AMM, liquidity pools containing pairs of tokens are used to facilitate trades. Prices adjust automatically based on supply and demand as users trade or add/remove liquidity. Liquidity providers earn fees from trades occurring in their pools, incentivizing their participation. Automated market makers support decentralized, permissionless trading, but come with risks such as impermanent loss for providers. Before using an AMM or any other DeFi service, ensure you trust the platform and identify all risks involved before connecting your wallet.

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