TL;DR – An Automated Market Maker (AMM) is a protocol that prices assets through mathematical formulas and liquidity pools, operating 24/7 on smart contracts. Liquidity providers earn a share of swap fees but face risks such as impermanent loss. Major AMMs exist on Ethereum and within the TON ecosystem.
Overview#
An Automated Market Maker (AMM) is a decentralized exchange protocol that replaces traditional order books with algorithmic pricing based on token reserves in a liquidity pool. The protocol runs on smart contracts, allowing trades to occur at any time without a central operator.
Liquidity Pools#
A liquidity pool locks two (or more) tokens in a smart contract. Users who deposit equal values of each token become liquidity providers (LPs) and receive a proportional share of the pool’s swap fees. For example, on STON.fi the fee for a single swap is 0.2% and is distributed among LPs according to their share of the pool. LPs must assess pool terms, monitor market conditions, and understand the risk of impermanent loss.
Impermanent Loss#
Impermanent loss occurs when the relative prices of pooled assets diverge from external market prices. The larger the divergence, the greater the loss compared to simply holding the assets. LPs can mitigate this risk by:
- Providing liquidity in stable‑coin pairs (e.g., USDT/USDC) where price volatility is low.
- Considering the pool’s advertised APR, which may offset potential losses.
- Regularly reviewing market prices and adjusting positions.
History of AMMs#
The concept was first articulated by Alan Lu of the Gnosis team. His colleague Martin Köppelmann discussed the idea with Vitalik Buterin, who later mentioned it publicly in 2016. In August 2018, Hayden Adams received a $100,000 grant from the Ethereum Foundation and launched Uniswap, the first widely used AMM platform.
Popular AMMs Outside TON#
- Uniswap – Launched in November 2018; daily trading volume reported at $1.5 billion (source: Coingecko). Its native token $UNI was airdropped in September 2020.
- Curve – Optimized for stable‑coin swaps; operates on ten blockchains and uses the $CRV token.
- PancakeSwap – BNB Chain‑based AMM with the $CAKE token and additional gamified features.
AMMs in the TON Ecosystem#
STON.fi
STON.fi is the leading AMM on TON, founded in 2022 by Vyacheslav Baranov, Mike Fedorov, and Andrey Fedorov. It offers:
- Access via the Telegram Mini App STON.fi Bot.
- A native token $STON with two roles: $ARKENSTON (non‑transferable governance token) and $GEMSTON (transferable reward token).
- A swap fee of 0.2%, shared among LPs.
- Integration with Omniston, a decentralized liquidity aggregation protocol that uses an RFQ system for optimal routing.
DeDust
DeDust launched in 2022; its utility token was originally $SCALE and was renamed $DUST in October 2024. Key modules:
- Portfolio – Tracks trades and positions when a wallet is connected.
- Exchange – Supports token swaps with adjustable slippage (1 %–10 %) and an expert mode.
- Earn – Lists pools with volume, APR, and other metrics.
Swap.coffee
Swap.coffee is a DEX aggregator on TON and a Binance partner. Its native token is $CES. Notable features:
- Cashback in various tokens for each swap.
- An internal routing algorithm that combines multiple pools to deliver the best possible rate.
The decentralized exchanges listed above do not require identity verification (KYC) as of November 2024.