What is an AMM? The formula that replaced the market maker
BlazePhoenix Engineering · updated 2026-07-18 · 4 min · written from the deployed bytecode
By Mitra — developer of the BlazePhoenix protocol.
Abstract in 15 languages · resumo · resumen · 摘要 · 要旨 · ملخص
English — An AMM is a formula that prices trades from a pool's balances instead of an order book; x·y=k always has a quote, and price impact is where it charges you.
Português — Um AMM é uma fórmula que precifica trocas a partir dos saldos de um pool em vez de um livro de ordens; x·y=k tem sempre cotação, e o price impact é onde te cobra.
Español — Un AMM es una fórmula que fija precios desde los saldos de un pool en vez de un libro de órdenes; x·y=k siempre cotiza, y el price impact es donde te cobra.
Français — Un AMM est une formule qui fixe les prix depuis les soldes d'un pool plutôt qu'un carnet d'ordres ; x·y=k cote toujours, et le price impact est où il vous facture.
Deutsch — Ein AMM ist eine Formel, die Preise aus Pool-Beständen statt aus einem Orderbuch bildet; x·y=k liefert stets einen Kurs, und der Price Impact ist die Rechnung.
Русский — AMM — формула, которая назначает цену из балансов пула, а не из книги заявок; x·y=k всегда даёт котировку, а price impact — где она берёт с вас плату.
Türkçe — AMM, fiyatı emir defteri yerine havuz bakiyelerinden üreten bir formüldür; x·y=k her zaman fiyat verir, price impact ise sizden aldığı yerdir.
العربية — AMM صيغة تسعّر الصفقات من أرصدة التجمّع بدل دفتر الأوامر؛ x·y=k يعطي سعراً دائماً، والتأثير السعري هو حيث يحاسبك.
हिन्दी — AMM एक फ़ॉर्मूला है जो ऑर्डर बुक की जगह पूल-बैलेंस से कीमत तय करता है; x·y=k हमेशा कोट देता है, और प्राइस इम्पैक्ट वहीं वसूलता है।
日本語 — AMMは板ではなくプール残高から価格を決める数式で、x·y=kは常に見積もりを出し、プライスインパクトが費用を課します。
中文 — AMM 是一条用池子余额而非订单簿来定价的公式；x·y=k 始终能报价，而价格影响就是它向你收费之处。
한국어 — AMM은 호가창 대신 풀 잔액으로 가격을 매기는 공식으로, x·y=k는 항상 견적을 내며 프라이스 임팩트에서 비용을 청구합니다.
Bahasa Indonesia — AMM adalah rumus yang menetapkan harga dari saldo pool alih-alih order book; x·y=k selalu memberi kuotasi, dan price impact tempat ia menagih Anda.
বাংলা — AMM হলো অর্ডার বুকের বদলে পুল-ব্যালেন্স থেকে দাম ঠিক করা সূত্র; x·y=k সবসময় কোট দেয়, আর প্রাইস ইমপ্যাক্টেই সে আপনার থেকে নেয়।
Filipino — Ang AMM ay pormula na nagpepresyo mula sa balanse ng pool sa halip na order book; laging may quote ang x·y=k, at ang price impact ang siningil nito.
A traditional market needs market makers — firms quoting buy and sell prices all day. An automated market maker (AMM) replaces them with a formula. The classic one is constant product: keep the two pool balances multiplied together (x·y) equal to a constant k. Every trade must leave that product unchanged, and that single rule is enough to quote a price for any size, forever, with no human quoting.
Because the product is preserved, the pool can never be fully drained — as one side gets scarce its price races toward infinity, so the last tokens are effectively priceless. That is a feature: the AMM always has a quote, even in a crisis, though the quote gets steep exactly when liquidity is thin.
What it costs you
Two costs hide in an AMM trade. The fee (a fixed cut, e.g. 0.3%) goes to liquidity providers. The price impact (the curve bending against you) is not a fee at all — it is the formula charging you for moving the balances. On deep pools both are small; on thin pools the impact dwarfs the fee.
Modern AMMs add concentrated liquidity, multiple fee tiers, and stable-swap curves, but the core idea is unchanged: a deterministic function turns balances into prices. An aggregator like BlazePhoenix reads many such pools at once, computes the true output on-chain, and routes your trade to the combination that leaves you the most — with any execution surplus returned to you.
Do not trust this page — reproduce it
Every claim above is checkable against the chain. Start here:
the constant-product identity is public: read any v2 pool's two balances with cast and multiply them — that product is the k the contract defends on every swapContracts are verified on every chain we deploy to — addresses in the protocol manifest. Deeper formal treatment: the whitepaper (PDF).
Share this article · join the discussion