Automated Market Makers (AMMs) are the underlying protocols used by Decentralized Exchanges (DEX) to allow users to perform trades of cryptocurrencies in a decentralized way with no middlemen. In a traditional trading market a buy order has to be matched with a sell order to achieve a trade. In other words, a coincidence of wants and needs has to occur, which is not always guaranteed. However, for an Automated Market Maker, users trade against the protocol itself, a smart contract —or rather a community pool of funds— which is, in simple terms, an open source computer program in which mathematical formulas define prices. The critical point is that no banks or intermediaries are necessary, giving crucial financial access to a much larger crowd, regardless of who they are with less barriers to access. weiterlesen