Guide to Building Automated Market Maker (AMM) for DEXs

From Basic Principles to Advanced Features and Real-World Insights

Photo by Behnam Norouzi on Unsplash

Table of Contents

1. Introduction
2. Understanding AMMs and DEXs
3. Blockchain and Smart Contract Foundations
4. Designing the AMM Model
5. AMM Math: Models and Market Effects
6. Smart Contract Implementation
   - Full Contract Code (For Learning Only!)
   - Critical Security, Safety, and Gas Notes
7. Advanced Features in AMMs
8. Real-World Case Studies
9. References and Further Reading
10. Conclusion

Introduction

Building an Automated Market Maker (AMM) for Decentralized Exchanges (DEXs) is a foundational step in decentralized finance (DeFi). Unlike traditional exchanges, AMMs remove the need for order books and instead use liquidity pools and algorithmic pricing. This guide is for developers and product architects seeking to create, secure, and extend their own AMMs — emphasizing real-world security, robust code, and integration of advanced features.

Understanding AMMs and DEXs