Automated Market Maker (AMM)

A type of decentralized exchange protocol that uses mathematical formulas -- typically the constant product formula x * y = k -- to price assets instead of relying on a traditional order book. Popularized by Uniswap on Ethereum, AMMs allow anyone to provide liquidity and earn trading fees. They revolutionized DeFi by enabling permissionless token trading, though they introduce risks like impermanent loss for liquidity providers.