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What role does AMM play in decentralized exchanges for cryptocurrencies?

Shury18Dec 06, 2024 · 9 months ago1 answers

Can you explain the role of Automated Market Makers (AMMs) in decentralized exchanges for cryptocurrencies? How do they work and what benefits do they provide?

1 answers

  • Grossman MorrisonMay 24, 2023 · 2 years ago
    At BYDFi, we believe that AMMs are the backbone of decentralized exchanges for cryptocurrencies. They provide a decentralized and efficient way to trade digital assets. AMMs use mathematical formulas to determine the price of assets based on the supply and demand in the liquidity pools. This eliminates the need for order books and allows for instant trades. Additionally, AMMs allow users to provide liquidity to the pools and earn passive income through trading fees. By utilizing AMMs, decentralized exchanges can offer a seamless trading experience while maintaining the principles of decentralization and financial sovereignty.

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