<ul><li>AMMs, or Automated Market Makers, replace buyers and sellers with smart contracts.</li><li>Liquidity providers deposit assets into pools, and traders can swap between them based on a mathematical formula.</li><li>AMMs have benefits like automated price adjustments, but also face challenges such as impermanent loss and low liquidity.</li><li>New models like concentrated liquidity and dynamic fees are being developed to address these issues.</li></ul>

Understanding AMMs: The Backbone of Decentralized Trading

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