AMM (Automated Market Maker)

An automated market maker (AMM) is a smart contract that holds a pool of two or more assets and uses a pricing formula — most commonly a constant-product curve (x × y = k) or a concentrated-liquidity variant — to quote a price and execute trades directly against that pool. There’s no order book and no counterparty to match; you’re always trading against the pool itself, with liquidity providers supplying the assets in exchange for a share of trading fees.

Most Solana DEXs and DEX aggregators route through one or more AMMs under the hood. Orca, Raydium, and Meteora all run AMM pools (including CLMM — concentrated-liquidity — variants), and Jupiter aggregates across all of them plus order-book-style venues to find the best execution price for a given trade.

AMMs show up outside plain token swaps too: some onchain options and perps designs use AMM-style pools to price and write contracts algorithmically rather than matching a buyer and a writer directly — see our onchain options guide for how that model compares to a CLOB or RFQ book. Depositing into an AMM pool as a liquidity provider carries its own specific risk — see impermanent loss for the mechanism that most differentiates AMM LPing from simply holding the underlying assets.