What is AMM+?

Bitcoin.com Exchange AMM+ innovates on the existing DeFi primitive by enabling automated market making for perpetual futures markets and unlocking leverage up to 10x. With a CeFi order book + DeFi AMM hybrid model, AMM+ works to efficiently allocate capital to markets that require liquidity.

Table of Contents

  1. What is an AMM?
  2. How is Bitcoin.com Exchange AMM+ different and what are its benefits?

What is an AMM?

An automated market maker (AMM) is a type of decentralized exchange (DEX) protocol that relies on a mathematical formula to price assets. Instead of using an order book like a traditional exchange, assets are priced according to a pricing algorithm.

An AMM works similarly to an order book exchange in that there are trading pairs (eg. BTC/USDT or BCH/USDC). However, users do not need a counterparty (another trader) on the other side to make a trade. Instead, you interact with a smart contract that “makes” the market for you.

By incentivizing the creation of liquidity pools, AMMs are able to provide the needed depth to enable smoothly functioning markets. Liquidity here refers to a market’s ability to easily exchange between two assets without dramatic shifts in the comparative value between the two assets.

Read more: Learn about market liquidity and why it’s important.

How is Bitcoin.com Exchange AMM+ different and what are its benefits?

The first difference is that Bitcoin.com Exchange’s automated market maker is built on perpetual futures markets rather than spot markets as with traditional AMMs. As futures are a derivative product, this provides traders with the option to use up to 10x leverage, giving them the opportunity to earn significantly more (given the same amount of capital) compared to traditional AMMs. Please note that using leverage carries the danger of liquidating your position. For this reason, it is recommended for experienced traders only.

Next, because the AMM+ is built on a custodial platform, it does not suffer from the scaling issues associated with decentralized networks like Ethereum. This means that traders can set up positions instantly and don’t have to pay hefty fees to do so.

Finally, Bitcoin.com Exchange allows AMM+ positions to be funded with any other supported asset (collateral), though margins and account values are measured in the stablecoin USDC.

Read more: Learn how to set up, manage, and redeem AMM+ positions.

Get started: Launch Bitcoin.com Exchange AMM+.

Bitcoin.com Exchange is powered by CoinFLEX.

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