Position Exchange

<h2 id="header-0">What is AMM?</h2><p>An Automated Market maker (AMM) is a protocol that runs on decentralized exchanges (DEX), that takes away the order book that exists on traditional exchanges, where liquidity is provided by buyer and seller orders, and replaces it with liquidity pools, a shared pot of tokens.</p><p>Users of the AMM supply the pool with tokens after which price of an asset is calculated by a mathematical formula.</p><h2 id="header-1">How do AMMs assist DEXs?</h2><p>AMMs help new DEXs who would be faced with a small number of buyers and sellers trading on a regular basis – or low liquidity – early on in their existence.</p><p>As assets provided by liquidity providers (buyers and sellers) grow in the pool, so does DEX’s liquidity.</p><p>Liquidity providers are incentivized by earning a fee for their share of the pool tokens provided, and the DEX is rewarded with increased liquidity, making trading on the DEX far easier.</p><h2 id="header-2">AMM vs Order book</h2><h3 id="amm">AMM</h3><p>Pros:</p><ul><li>Liquidity is present for otherwise illiquid markets</li><li>AMMs enables traders to always get a price quote on their asset, regardless of the number of active orders submitted to the exchanges</li></ul><p>Cons:</p><ul><li>There is a risk of high slippage for large orders due to small liquidity pools</li><li>Capital inefficiency, since most of the trades are executed within a narrow range of price levels unless the market is extremely volatile</li><li>Risk for liquidity providers, such as impermanent loss as described above</li><li>Higher risk of front-running compared to the orderbook model</li></ul><h3 id="orderbook">Orderbook</h3><p>Pros:</p><ul><li>Order book exchanges are ideal for liquid markets</li><li>Order book exchanges remain optimal for surfacing market prices and placing large orders</li><li>Order book exchanges reduce the risk of slippage</li><li>Order book exchanges are widely accepted by both institutional and retail traders alike</li></ul><p>Cons:</p><ul><li>An individual cannot trade if their highest bid is lower than the lowest ask, which presents a poor design for illiquid markets</li><li>Order books typically face the risk of front-running. Front running is the risk of miners being able to mine a particular block obtained from information provided when an order is placed. This means that miners can earn a risk-free profit. However, Injective will be the first exchange protocol to completely eliminate front-running by utilizing the FBA auction model.</li></ul><h2 id="header-3">Position Exchange DEX 2.0</h2><p>Position Exchange is an EVM decentralized exchange that uses AMM and Orderbook models combinably. This combination helps to lower slippage and bring better prices to users, thus helping you gain more profit.</p><p>Features of DEX Ver 2.0</p><ul><li>Lower slippage than traditional AMM DEX</li><li>Higher liquidity than traditional AMM DEX</li><li>Limit orders can be placed On-Chain</li><li>Restrict Sandwich Attack. A sandwich attack is a type of front-running attack. It is applied over transactions sent to a decentralized exchange to buy tokens</li></ul><p>Try trading on Position Exchange which serves you with an excellent user experience: Fast, No lag, User-friendly, and No bugs. You can buy and sell at the best price in the market in high quantities. Join the Position Exchange ecosystem now</p><p>Learn more about Position Exchange and find us on the following platforms:</p><p>Website: position.exchange</p><p>WhitePaper: https://position.exchange/whitepaper.pdf</p><p>Reddit: https://www.reddit.com/r/PositionExchange/</p><p>Medium: https://positionex.medium.com</p><p>Twitter: https://twitter.com/PositionEx</p><p>Telegram: https://t.me/PositionExchange</p><p>TG Channel: https://t.me/PositionAnn</p><p>Github: https://github.com/PositionExchange</p>

How do AMMs assist DEXs?

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