Legacy AMM
What is an AMM?
An Automated Market Maker (AMM) is a smart contract that powers decentralized exchanges by letting anyone trade tokens or provide liquidity—no centralized exchange or order book needed. Instead of matching buyers and sellers directly, AMMs use pools of tokens, where users (called liquidity providers) deposit their assets.
Anyone can become a liquidity provider by adding tokens to these pools, helping keep the market active. In return, they earn a share of the trading fees every time someone trades, making it easy for everyday users to participate and benefit from DeFi.
Legacy AMM Overview
OctoSwap's Legacy automated market maker algorithm offers the tried-and-true constant product market maker model, which has powered decentralized trading since the earliest days of DeFi. This simple yet powerful design allows anyone to become a liquidity provider, earning a share of trading fees by depositing token pairs into a pool.
The legacy AMM uses the familiar x×y=k formula, where the product of the two token reserves remains constant after each trade. This creates a smooth curve that automatically determines prices based on supply and demand, enabling instant swaps with no need for traditional order books.
Key Benefits
Simplicity: Just deposit tokens, receive LP tokens, and start earning a share of trading fees—no need to manage price ranges.
Passive Participation: Perfect for users who want broad market exposure and easy liquidity provision.
Battle-Tested: Built on proven, audited contracts for security and reliability.
Important Considerations
While classic AMMs are easy to use and require minimal management, it's important to understand trade-offs like impermanent loss and potential slippage in volatile markets. For those seeking more control and capital efficiency, OctoSwap also offers advanced concentrated liquidity pools.
Ready to get started? Explore how to provide liquidity in legacy pools →