Understanding AMM or Automated Market Maker!!
Introduced by Vitalik Buterin in 2017 and launched by Uniswap a year later , AMM is a protocol that operates on the decentralized exchange DEX . AMM allows users to easily buy and sell digital assets without any third party intervention. AMM uses mathematical algorithms to suggest appropriate prices for digital assets to be traded between buyers and sellers, and operates as a fully automated process that connects orders between users. Simply put , you can buy and sell virtual assets in a way close to P2P (Peer-to-Peer) where there is no need for a third party to judge the appropriateness of the transaction .
One of the main reasons for the popularity of AMMs is that they are easy to use, convenient, and low cost compared to traditional centralized exchange algorithms. Additionally, AMM operates faster than centralized systems, operates smoothly with the help of smart contracts , and is highly secure due to the blockchain network.
