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Automated Market Maker (AMM)

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Last updated 1 month ago

An Automated Market Maker (AMM) algorithm is a decentralized mechanism that provides continuous liquidity without relying on traditional order books by using a mathematical formula to determine asset prices. A common example is the Constant Product Market Maker (CPMM) model, which uses the formula x · y = k, where x and y are the reserves of two assets in a liquidity pool and k is a constant. As trades occur, the reserves adjust, but their product remains constant, automatically setting the exchange rate based on the current balance of assets. This system ensures that prices are determined transparently and predictably in real-time, enabling efficient, trustless trading via smart contracts on the blockchain.

A360X leverages an Automated Market Maker (AMM) algorithm to facilitate seamless, on-chain swaps between tokenized Real-World Assets (RWAs) and cryptocurrencies. This mechanism dynamically adjusts asset prices based on current liquidity pool balances, ensuring that every trade is executed in a transparent and efficient manner. Rather than relying on traditional order books, the AMM algorithm enables continuous liquidity and fair pricing across all trading pairs. To understand the underlying mathematical principles and specific formulas used by the A360X AMM, please refer to the of the documentation.

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