Automated Market Maker vs Constant Product Formula
Quick comparison to help you distinguish these two crypto terms.
Automated Market Maker
intermediate
fundamentals
An automated market maker is a decentralized protocol that enables cryptocurrency trading using algorithm-controlled liquidity pools instead of traditional order books and human or institutional market makers.
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intermediate
fundamentals
The constant product formula is the mathematical rule used by most AMMs to price tokens, maintaining the product of two pool token quantities as a fixed constant across every trade.
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