PixelSwap101: How Do AMM & Liquidity Pools Work?
Automated market makers (AMMs) have transformed on-chain trading by removing the need for traditional order books. On conventional exchanges, traders require a counterparty to execute trades. AMMs, however, enable seamless trading on token pairs, even those with typically low liquidity on order book exchanges. The core of this system is the liquidity pool—a collection of funds provided by liquidity providers and secured in a smart contract, all of which is accessible on PixelSwap.
Understanding AMMs and Liquidity Pools
Consider an order book exchange as peer-to-peer, whereas trading on an AMM is peer-to-contract. When you trade on an AMM, you're not interacting with an individual but with the liquidity in the pool. As long as the pool has enough liquidity, your trade can proceed without requiring a specific seller. For instance, buying $DOGS on a TON DEX doesn’t involve a direct transaction with a seller. Instead, an algorithm within the liquidity pool handles the trade, setting prices and managing execution based on available liquidity.
In this setup, liquidity providers supply the assets you trade against, though they aren’t direct counterparts like in traditional order book exchanges. Instead, you’re interacting with a smart contract that governs the pool, offering a unique trading experience on PixelSwap.
Benefits of AMM & Liquidity Pools on PixelSwap
On PixelSwap, AMMs and liquidity pools enable fast, efficient trading while reducing reliance on counterparties. This structure promotes smoother transactions, lowers slippage, and provides increased access to trading opportunities across various tokens in the TON DEX ecosystem.
As more users join PixelSwap and contribute to liquidity pools, the platform benefits from enhanced depth and trading efficiency, supporting a vibrant and liquid market. Whether you’re a seasoned DeFi trader or new to the space, AMMs on PixelSwap offer a revolutionary way to engage with the TON network.
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PixelSwap101: How Do AMM & Liquidity Pools Work?
Official Links
• LayerPixel: Homepage | Twitter | Community | Medium
• PixelSwap: Homepage | Twitter | SWAP | Pool
• PixelDAO: Twitter | Forum | Chat Group