AMM

Automated market maker method (AMM)

ParaPad becomes the automated market maker a method where an algorithm used by renowned decentralised platforms like Uniswap and Sushiswap, Parapad will do the same. As It addresses the liquidity challenge of the traditional order book method and offers many other benefits.

With AMM, traders don’t need any third party to agree to their transaction terms. AMM-based exchanges do not require traders to wait long to find matching trades. Instead, they can make fast trades using a pool of funds that automatically execute trades based on certain parameters.

The trading pool n AMM is a liquidity pool that essentially follows the principle of demand and supply. Each time a trader buys a token, the liquidity pool gradually increases the price of that specific token. Each time a trader sells a token, the pool gradually decreases its price. This way, the exchange system becomes fully automated, eliminating counterparty and security risks.