What is Automated Market Maker (AMM)?

An automated market maker (AMM) is a fully automated decentralized exchange (DEX) where trades are made against a pool of tokens called a liquidity pool. An algorithm regulates the values and prices of the tokens in the liquidity pools. Since AMMs do not rely on an active market of buyers and sellers, trades can occur at any time. Examples of popular AMMs include Uniswap, Curve, and Balancer.