AMM TRADING STRUCTURE RISES ABOVE ALL

AMM TRADING STRUCTURE RISES ABOVE ALL

By Dayve___ | DeFi-ed | 26 Nov 2021


What is AMM you ask, and how does it work?

The Automated Market Maker (AMM) is a method that automates digital asset trading without the need for authorization, and trades are executed automatically using liquidity pools to substitute buyers and sellers.

The Cryptocurrency Exchange World was dominated by “Order Books” before the emergence of Automated Market Makers. The order book is a system that keeps track of all purchase and sells orders that are used to duplicate the price and quantity of crypto assets. The matching of buyer and seller orders takes up part of the traders’ valuable time and has several serious drawbacks, such as slippage and lag in price discovery, among others.

Plutos network applies pAMM mechanism during the trading of products such as options, swaps, contracts etc.

After users place collaterals in assets supported in the Plutos Network, for example, pETH, pUSD etc, the users can trade the synthetic products provided, without any worries about latency or big slippage.

The traditional order book is replaced by liquidity pools that are pre-funded on-chain for both assets of the trading pair. The liquidity is provided by other users who also earn passive income on their deposit through trading fees based on the percentage of the liquidity pool that they provide. 

 

In essence, The advantages of AMM application are:

 • Using this automated approach establishes several new trading models

 • As a result of this, the market creates a lot of liquidity.

 • Trade latency is measured in milliseconds rather than seconds.

 • Reduces the ability to do things like front running, wash trading, and price manipulation, among other things.

 • Between transaction executions, price slippage is measured in fractions of a cent.

 • Orders may be created and costs may be specified in a matter of seconds.

 • This method reduces pricing swings and increases acceptable profit margins.

 

ABOUT PLUTOS NETWORK

Plutos Network is a decentralized cross-chain derivative issuance and trading platform which provides infinite liquidity based on the schemes of Staking and Minting and leading Blockchains like Solana, Polkadot and BSC. With Plutos, all users can have access to synthetic assets from both traditional financial market and the crypto market. By enabling cross-chain and on-chain functionalities, Plutos will be able to deliver keynote features such as scalability, high interoperability, low cost of transactions, offering the perfect solution for current DeFi derivative market to difficulties and limitations such as high gas fee, low transaction speed, vulnerability of hacking such as flash loan etc.

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Dayve___
Dayve___

My name is David, I have 4 years experience of FX and Crypto, i started my DeFi journey 2020 during the lockdown, and I'm here to share knowledge gathered overtime.


DeFi-ed
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