Automated Market Makers (AMM)

‌AMM is an implementation of Decentralized Exchanges (DEXs). AMMs replace the existing exchange order-books with a permissionless liquidity pool run by algorithms. In DeFi, the constant flow of liquidity is handled by AMMs. Smart contracts lock tokens in order to provide liquidity which enables token pair exchanges. In return, the users, also called Liquidity Providers, are issued an LPT (Liquidity Pool Token) that represents the value they put into the Liquidity Pool.