Automatic Market Maker (AMM)

An automated market maker (AMM) is a type of decentralized exchange (DEX) protocol that relies on a mathematical formula to price assets. Instead of using an order book like a traditional exchange, assets are priced according to a pricing algorithm.

Those pools are filled with other users’ funds. They deposit them into the pool, receiving liquidity provider tokens (or LP) in return. They can use those tokens to reclaim their share, plus a portion of the trading fees.

An AMM works similarly to an order book exchange in that there are trading pairs – for example, ETH/DAI. However, you don’t need to have a counterparty (another trader) on the other side to make a trade. Instead, you interact with a smart contract that “makes” the market for you.

The liquidity provided to the exchange comes from Liquidity Providers ("LPs") who stake their tokens in "Pools". In exchange, they get LP tokens, which can also be staked to earn FALCON tokens in the "farm".

When you make a token swap (trade) on the exchange you will pay a 0.6%, which is split down as half of it will be returned to liquidity pools in the form of fee reward for liquidity providers and balance half will be sent to the treasury of polyfalcon