From the course: Foundations of Decentralized Finance (DeFi)
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Automated market makers
From the course: Foundations of Decentralized Finance (DeFi)
Automated market makers
- The third problem we experienced in the crypto industry was a lack of liquidity for many alt coins. Now, prior to 2018, if you did buy an alt coin, it was sometimes difficult to get out of your position or sell those tokens. And again, if anybody was part of the 2017 bull market, you may have experienced this. I know I did. So along with the invention of Dexis came the invention of automated market making. Automated market makers allow for people to pool resources to create liquidity. For providing this liquidity, users now have the ability to earn yield from their tokens as well. Effectively, AMMs work by allowing people to pool their capital to enable trading in a peer-to-peer environment. In exchange for this, they receive trading fees. Contributing to an AMM is a foundational step that you'll need to get comfortable with if you want to yield farm.
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