What is an AMM and why do we need it? Explained.

[@ezenwakavictor4237]

Your teaching is top-notch. Spot on!

[@Zedster88]

Great vid. I suggest running at 1.5x speed still very comprehendible.

[@SamJones1337]

its great and i ran it at 2x

[@davem3673]

Good tip

[@abuturki4460]

I just learned about this feature in KZbin from you.

[@thepurpleflute9740]

Good call I appreciate it!

[@qichang4485]

I've learnt from tons of tutorials about AMM. This one apparently the best. Crystal clear! Thanks sir.

[@santiagodevrel]

This video is gold, thanks man!

[@0xkerman]

Glad it helped!

[@markmaximus100]

This is the best explanation of the math behind AMMs hands down!

[@nikitabobyshew7927]

Best explanation I've found. Very clear. Thank you

[@adamsasso1]

Nice explanation. I’d like to offer a slight correction in some of the phrasing you used - it might help keep things clear and understandable in the future... When talking about the ‘Buy’ order you refer to the price first, then the amount. For example: “Alice would pay $100 for 1 ETH.” Conversely, on the “Sell” side you’d say: “Bob offers 1 ETH at $100.” The key being the order (price, then amount) or (amount, then price) and the words “for” and “at”. This way there’s no confusion about what side each party is on and what they want to do. I worked on a trading desk for years and this is how we kept things straight. Also, the Buy side is generally written on the left, and the Sell side on the right.

[@rusydiumar6696]

cool

[@thepurpleflute9740]

Consistency matters, fair enough. :)

[@Joshh.K]

i was dying for a visual understanding of what i would be doing if i staked a coin, in exactly the format you've provided. thank you mate, proper hit the spot!

[@sander72991]

Loving the format of this video. Great job 👏

[@maxholloway4788]

Hey, overall great video but the traditional order book explanation is a bit off. The order book graphic is a histogram of bids (green) and asks (red); on the x-axis are the prices, and on the y-axis are quantities.

[@sommi888]

🧡💛💚💙 You handwriting is epic and the colours are nicely chosen 🧡💛💚💙

[@tan.nicolas]

What a good teacher you are!

[@radicalexile]

Awesome content. Such a great way of explaining the concept.

[@rushiljohar4206]

Most Required Video. Wazirx Exchange India just went AMM. thanks dude! 🇮🇳🙏

[@ignatiuse6857]

This was an awesome explanation! Thank you ... last thing I would love to know is what the relationship is between slow/expensive smart contracts and why this makes traditional order books unfeasible

[@pengjoon]

Love the explanation 🔥

[@laurenzhasselbach8231]

Best AMM Explanation Video! Only one detail I did not quite understand. Why is an Order Book unsuitable as a Smartcontract and suitable for the AMM. Is it because the Smartcontract offer would have to be written on the block chain every time? Whereas the AAM only has to read from the block chain, so the prices are live? Nevertheless, a calculation has to be made and computing power costs in the Ethereum network. As I said, I didn't quite understand it yet :D.

[@maxholloway4788]

Hi Laurenz! Decentralized apps rely on smart contracts on the blockchain, and that blockchain is the single source of truth for everyone using the network. Market makers on centralized exchanges (e.g. the New York Stock Exchange) place limit orders to buy or sell an asset at particular prices. For example, they might offer to buy Apple shares at $122 and also offer to sell Apple shares at $123. But since price is relatively volatile, for both stocks and crypto, the market maker often times needs to cancel their orders. For example if the market maker thinks the price of Apple stock will go up to $130, she might want to cancel her offer to sell Apple at $123. In centralized exchanges this is not an issue, since they just use the exchange's internal servers to cancel the order. However on decentralized exchanges, cancelling an order might cost a couple dollars. Typical market makers on centralized exchanges can place hundreds or thousands of orders per day, and make cents on each transaction, and also cancel a lot of orders. They would lose a ton of money if they did it all on the blockchain, making it harder for order-book style exchanges to exist on the blockchain. Hope this helps!

[@TheRollupCo]

Simply amazing! Well done, very like your explanation.

[@yoeydanjuma]

great content absolutely love the old school black board style

[@valeriobraconcini-phipps9418]

Hi can you explain further why the curve is exponential and not linear

[@vrcmacki2701]

Great explanation, thank you!

[@GermanMazzaferro]

Excellent explanation!!

[@joeysang77]

You nailed it! Very impressive. Thank you!

[@JayTrinidad]

That was amazing! Mind blown 🤯

[@Benmansouri]

I hope you make a video about hybrid AMM/orderbook

[@majedti4126]

can you do a vid on impermanent loss?

[@jejunegamingtv1359]

is it me or is the explanation wrong? You want to give ETH to the pool but you deduct 1 from the pool -> 10 - 1? Or am I missing something? Shouldn't it be 10 + 1 and for the DAI, it should be 1000 + x?

[@SilasAram]

So basically an AMM is an Automatic Currency Exchange System or AI Bank. So can you create a AI Bot using AMM Engineering to be gather Data for other things like Email Marketing?

[@elijahbrown4594]

Thanks!! Very helpful!!

[@brookngamotu2639]

Change speed of video to 1.75x

[@GregJohns]

Awesome explainer

[@iamritambhar]

One of the best explanations of AMM, but I had to watch it at 1.5X speed 😁

[@funnymuny7127]

your awesome thank you

[@ethanluc8908]

at 13:17, should that be 111 DAI (which is $111 since DAI = $1)?

[@jf7sm53]

yes, in that example we take 1 eth and give 111DAI. This mention of 111$ is super confusing. At that point in video I had to stop and look up somewhere else to sort this out. This is an example of how you can tell any bullshit in calm and confident voice and majority of people won't notice lol. Makes me think if people who comment "awesome" and "nice one" actually watched the same video I did.

[@catchacard4638]

great, loopring does this

[@erickjian7025]

before 11:34, you mentioned somebody wants to buy ETH (from the pool). I'm confused at 11:34 How are they giving ETH to the pool ?

[@brownmiester]

i think he mis spoke

[@varunkao4987]

[8:51] Perhaps I missed this, but I have to ask, how is ratio in the contract determined?

[@HaiHoang-dd8co]

Beautiful explain, can you share the app you use to do this? Many thanks

[@princedavid88]

Great video.

[@funnymanallinsanw9606]

But what happens if eth price increases else where? Will it also increase in the AMM by the same amount because there will be more demand on the AMM as well? And what guarantees that the increase in price of eth on the AMM will be the same as the increase elsewhere?

[@mohammadr.zeinali4708]

That was awesome

[@tahirasiddiqui6565]

Great content 👍👍

[@cammylee591]

nice one bro

[@sudeep.g]

Thank you so much! Great explaination

[@AX1A]

Thanks, you’re the best

[@nicolasweiss6186]

Hi, thanks for the great video! For red-green orderbook diagram (/histogram), shouldn't the price be the x-axis and volume be the y-axis instead?

[@maxx7694]

Lol yeah it doesn't look right to me either. As the price increases the cumulative sell orders should be increasing as well, not decreasing.

[@jonwu4529]

Actually I m a little confused in this model, X x Y = K, is that means when one man sells 1 eth and use AMM, the price of eth will go up?

[@Channel60]

How does one find these AMM arbitrage opportunities consistently?

[@omparikh4426]

does k change when market makers provide equal quantity of both x and y?

[@user-xy8cq5oi9f]

At 18:05 you said "I just have to give two quantities of tokens to the smart contract and I become a market maker/provide liquidity" What do you mean? - this part has no context. Is this separate from the buyer and seller? Please explain.

[@onekycarscanners6002]

You have to stake the two tokens if not you are just a buyer and seller or a burrower and lender.

[@user-gs7uu6ig7o]

But who is the arbitrageur? On something like Pancake Swap, or any AMM, I see the option for providing liquidity or as you would say being a "market Maker". In return a LP gets a good APR. And then there are pools where you can yield farm. What do the pools contribute to formula? Those are basically all the options I see. So the arbitrage is where?

[@onekycarscanners6002]

Any one can arb just look at the price difference or set a bot to do it. Arbs = risk free traders.

[@gsuarezduek]

amazing, thx!

[@sebastianojeda5283]

Gold

[@galvinng1997]

You say the price of Dai is x/y = 0.01. But Dai is $1, not 1 cent...?

[@cryptohype4294]

Please keep it up-

[@mspacey]

so AMM is the entity doing the arb? if so the smart contract could almost use any math and AMM will arb it back right? the math doesnt have to be x*y = k; it could be anything like x*2y=k; and it wouldnt matter. As long as arbitrageurs bring it back.

[@asandrius86]

thanks but if you want to buy ETH, don’t you reduce the amount of ETH and not sum?

[@jejunegamingtv1359]

that was what i was thinking as well.

[@brownmiester]

wait price of dai is .01? at 10:53?

[@fortunatluethi]

ove this, what platform did you use explaning this?

[@mrmohamed5494]

notability

[@sehz1789]

Does anybody know who started this whole AMM model ? i dont think it was uniswap that was the first.

[@DewaldVDB]

Would be nice to know yeah

[@maxx7694]

I'm not sure about the implementation but I believe it was first described as a possibility for Ethereum in a paper by Vitalik.

[@sehz1789]

@@maxx7694 i think youre right . and bancor was the first to implement i think

[@Kompot01]

I do not get from where do they got first numbers x and y.

[@onekycarscanners6002]

The first Lp should provides it.

[@mccorrect3470]

So he paid $111 for something that costs $100 because the pool has to rebalance?

[@jonnymorley1344]

some errors but good to get the gist

[@financialgyaan9656]

No new video coming? 🥺

[@rusydiumar6696]

DAI Price 1 1USD, but a minute later you said DAI Price = 10/1000 = 0.1 USD. Cool..... How come....

[@sudeepjc]

It's 0.1 ETH, it always works in pair. ETH vs DAI

[@noirimsi]

so, defi dex pools are scam? xd

[@whatthefunction9140]

So be careful swapping a small pools kids.

[@rushiljohar4206]

Just reduce the sell price and increase the buy price in smart contact.. no need to do soo much math.

[@bereketmol4227]

You lost me 5 times

[@ddljddlj704]

Lol same

[@philhellmuff]

Great video but it could have been 10 min shorter if you had just used slides.

[@buddahJesus]

I CAN DODGE BULLETS, BABY!