Automated market makers (AMMs) are an increasingly-popular branch of decentralized finance (DeFi), falling into the specific subset of decentralized exchanges (DEXs). AMMs’ broad goal is to reduce the number of moving parts that facilitate cryptocurrency trades by replacing limit orders (and the resources that go into fulfilling them) with an automated means of token price valuation. Sounds complicated, right? Well, it’s admittedly a concept that experienced crypto traders might grasp more easily than laymen. Put in simple terms, however, it’s not beyond your comprehension.
The choice of which cryptocurrency wallet to use couldn’t be more important. You wouldn’t choose a physical wallet with a false bottom, and you should be at least generally aware of cryptocurrency wallet options so that you don’t choose a crypto wallet with potentially critical flaws.
Cryptocurrency exchanges, also known as EXs, are a means for consumers to purchase and sell tokens. They bring together buyers and sellers on a proven platform to trade cryptocurrency and, in doing so, help establish the market price for a given token. Many cryptocurrency exchanges to date have been centralized. That is, they are created and managed by a central authority. Exchanges such as Binance, Kraken, Coinbase, and Gemini are all centrally-managed crypto exchanges with significant user bases.
The sphere of decentralized finance (DeFi) is ripe with specific use cases serving specialized purposes. The concept of decentralized autonomous organizations (DAOs) is certainly relevant to conversations about DeFi, but it does not necessarily fit into the DeFi box—its potential applications are simply too great to be relegated to decentralized finance alone.
The uninitiated could be forgiven for thinking that “yield farming” refers to the latest crop of corn or peanuts. Rather, the term refers to a cutting-edge trend by which those who own cryptocurrency can reap guaranteed, steady returns.