AMM Basics

AMMs or Automated Market Makers are DeFi primatives that allow trustless and fully decentralized trading between 2 tokens (token X and token Y) without the need of traditional order books. Underneath it is a smart contract (pool) that holds these tokens at specific value compared to each other.

Anyone can withdraw token X or Y, but they must deposit significant other token of equal amount so that the total amount of assets in pool do not decrease.