> For the complete documentation index, see [llms.txt](https://support.bancor.network/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://support.bancor.network/bancor-amm/amm-automated-market-maker.md). # AMM: Automated Market Maker Bancor is recognized for its foundational role in the DeFi space, having developed the first fully [decentralized AMM powered exchange](https://blog.bancor.network/rethinking-the-order-book-the-march-towards-automated-markets-150f1325fb8c). Bancor's debut [introduced](https://patents.google.com/patent/US11107049B2/en?q=\(Methods+for+Exchanging+and+Evaluating+Virtual+Currency\)\&oq=Methods+for+Exchanging+and+Evaluating+Virtual+Currency) the equations, mechanisms, and concepts that continue to serve as the bedrock on which decentralized exchange remains founded a decade later. Bancor introduced a network of onchain liquidity pools to pair pools of tokens with one another. Users can trade against these pooled token pairs, with prices set algorithmically based on both the size of the user’s trade and the depth of the corresponding token pools. This novel approach to market making proved to be a paradigm shift within the decentralized exchange (DEX) space. Traders now have guaranteed access to onchain liquidity with transparent, upfront pricing, doing away with the need for a counterparty. Token owners can also turn existing holdings into productive assets through liquidity provision to these DEX pools, earning returns from protocol swap fees imposed on trades that get routed through the platform. This has turned pooled market-maker liquidity into a new asset class (“liquidity positions”), allowing for broader, more competitive involvement in market making. Bancor's foundational [whitepaper](https://bancor.network/whitepaper), penned in 2017, lists Eyal Hertzog, Galia Benartzi, and Guy Benartzi as its architects. The name Bancor pays homage to John Maynard Keynes, who, in 1940, introduced the term to conceptualize a supranational currency. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters: ``` GET https://support.bancor.network/bancor-amm/amm-automated-market-maker.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.