DeFi
AMM (Automated Market Maker)
Smart contract that prices trades using a math curve instead of an order book.
AMMs replace human market makers with deterministic formulas. The most common is the constant-product formula (x · y = k) used by Uniswap v2, Sushi, PancakeSwap and most spot DEXs. Liquidity providers deposit pairs of tokens and earn fees on every swap.
Variants like concentrated liquidity (Uniswap v3), stable curves (Curve) and weighted pools (Balancer) optimize for different trade-offs between capital efficiency and impermanent loss.