# AMM DEX

#### AMM(Automated Market Maker)? 

An automated market maker (AMM) is the underlying protocol that powers all decentralized exchanges (DEXs). They are autonomous trading mechanisms that eliminate the need for centralized exchanges and related market-making techniques. 

#### Liquidity Provider

Liquidity Provider can combine X and Y tokens to create liquidity for X-Y token pair. This is described as providing liquidity. A pool created by a liquidity provider allows traders to easily swap(=exchange) X tokens to Y tokens and vice versa on-chain.

#### CPMM(Constant Product Market Maker)

![Uniswap's CPMM 그래프 ](/files/EqHJOEEMKwOoWiKJj219)

Most pairs use the traditional Uniswap CPMM method, except for stable swaps. CPMM-based transactions are defined as X\*Y = K and based on that formula, the price range of two tokens is formed according to the quantity(liquidity) of each token. As the supply of X token increases, the supply of Y tokens decreases, and vice versa. As long as there's liquidity in the pool, the trader can trade at any time. 

#### How to determine the exchange rate and price at stable swap (Curve)

![](/files/xZ1djXHGKgW8jzDyi94Z)

StableSwap on Curve is AMM for stale coins and features low fees and minimum slippage. StableSwap on Curve has advantages not only for stable coins such as USDC, DAI, and USDT but also for coins of equal value. For example, all WBTCs (wrapped BTC) in Ethereum are 1:1 corresponding to the actual BTC, and have the same value. 

![(Swap 예시)](/files/7ErOm7ENUoLVp1zlIYWS)

* Swap fee : 0.3% (DAO Fund)


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