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.
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 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.
Lending has emerged as one of the most popular and practical use cases within the sector of blockchain-powered financial products known as decentralized finance (DeFi). The ability to borrow value-backed assets without the middleman, you say?
In our recent study Perceptions and Understanding of Money — 2020, we surveyed Americans to gauge how well they understand the mechanisms of money, including concepts such as quantitative easing (QE). We hope that this “Everything You Need to Know” series will help improve understanding of money-related topics and issues which could not be more relevant today.