#### **AMM** AMM stands for Automated Market Maker. In traditional finance, normal market makers determine the price of a stock in a given transaction. Typically, when a party states the price you are willing to sell an asset, a broker will connect you to a buyer willing to buy your asset. This broker can then set the actual price of the exchange, typically the midpoint price, and can add any fees they want to this service. On the other hand, an AMM automates this process in [**cryptocurrency**](https://www.slush.org/article/mempool-dao-and-blockchain-explained-the-web3-glossary/#crypto) transactions by creating connected liquidity pools made up of the two currencies being exchanged at that moment. The price set for exchange between these two pools is dictated by the ratio of these paired [**tokens**](https://www.slush.org/article/mempool-dao-and-blockchain-explained-the-web3-glossary/#tokens) between the two pools – no broker is needed to determine the price. This is fully automated through the use of algorithms such as **[smart contracts](https://www.slush.org/article/mempool-dao-and-blockchain-explained-the-web3-glossary/#sc)** to isolate the exact amount wanted if somebody is buying or selling through an AMM — referred to as AMM protocols. Examples include [Uniswap](https://uniswap.org/) and [Sushiswap](https://sushi.com/), which raise the tokens for their pools by offering a cut of transaction fees to people who [**stake**](https://www.slush.org/article/mempool-dao-and-blockchain-explained-the-web3-glossary/#lock) and lock up their tokens in these AMM pools. #boat https://www.slush.org/article/mempool-dao-and-blockchain-explained-the-web3-glossary/#trillema