An automated market maker is a DEX architecture in which trades are executed against pooled liquidity, with the price determined by a formula instead of an order book.
The dominant formula is the constant product model (x · y = k) used by Uniswap v2 and forks. Variants include Curve's stablecoin-optimised curves, Balancer's weighted pools, and Uniswap v3's concentrated liquidity.
AMMs unlocked permissionless liquidity provisioning: anyone can deposit a pair of tokens and earn fees from traders. They also created the threat models that define DeFi security:
- Impermanent loss for liquidity providers.
- Slippage that grows with trade size relative to pool depth.
- Price manipulability of low-liquidity pools, exploited via flash loans.
- MEV extraction on every traded order in the public mempool.
Any protocol that reads price from an AMM directly, without TWAP, without redundant sources, should be reviewed under that lens.