Smart Contracts
Intermediate
What is
AMM (Automated Market Maker)?
A DEX mechanism using liquidity pools and algorithms instead of order books for trading.
AMMs replace traditional order books with liquidity pools and mathematical formulas (like x*y=k) to determine prices. Liquidity providers deposit token pairs and earn fees from trades. On Ergo, AMMs benefit from eUTXO's atomic execution - no partial fills or sandwich attacks.
Key Points
- No order book needed
- Prices set by algorithm (x*y=k)
- Liquidity providers earn fees
- Anyone can provide liquidity
- Slippage depends on pool depth
- eUTXO prevents MEV attacks
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Frequently Asked Questions
Questions about AMM (Automated Market Maker)
Common questions about this topic
How to get started with Ergo?
Start by getting a wallet (Nautilus for browser, Terminus for mobile). Back up your seed phrase securely offline. Get some ERG from an exchange (Gate.io, KuCoin) or DEX (Spectrum). Make a test transaction. Then explore: try DeFi on Spectrum, check out NFTs, or dive into the technology if you're a builder.
How-to
Getting Started
How to use Spectrum DEX on Ergo?
Connect your Nautilus wallet to Spectrum Finance, select tokens to swap, review the rate and slippage, then confirm. Spectrum uses AMM liquidity pools for instant trades. You can also provide liquidity to earn fees. All trades are atomic - they complete fully or not at all, with no front-running possible.
How-to
DeFi
Is Ergo a good investment?
This is not financial advice. Ergo has strong fundamentals: fair launch (no VC dump risk), innovative technology (eUTXO, Sigma Protocols, NiPoPoWs), active development, and a cypherpunk ethos. It's a smaller market cap project with higher risk/reward than established chains. Research thoroughly, understand the technology, and never invest more than you can afford to lose.
Comparison
Getting Started
How to provide liquidity on Ergo?
On Spectrum Finance, select a pool, deposit equal value of both tokens, and receive LP tokens representing your share. You earn a portion of all trading fees. Withdraw anytime by returning LP tokens. Be aware of impermanent loss if token prices diverge significantly.
How-to
DeFi