DeFi

Automated market maker (AMM)

Also called: AMM

In shortA type of DEX that prices trades with a formula based on the tokens in a liquidity pool, instead of an order book.

Uniswap made AMMs popular: a pool holds two tokens, and the price shifts automatically as traders swap one for the other. Anyone can supply the tokens and earn trading fees, as a liquidity provider.

Large trades in small pools move the price a lot, which shows up as slippage.