What Is a Bitcoin AMM?
A Bitcoin AMM is a decentralized protocol that enables trading by using liquidity pools instead of order books. Traders swap against pooled liquidity, and liquidity providers earn fees from each trade.
What Is a Bitcoin AMM?
An Automated Market Maker (AMM) on Bitcoin replaces traditional order book matching with a mathematical formula — typically the constant product formula (x * y = k). Instead of matching individual buyers and sellers, traders swap against a pool of assets.
Bitcoin AMMs are relatively new because Bitcoin's base layer doesn't support the smart contracts needed for AMM logic. Layer-2 networks like Spark now enable AMM protocols to run on Bitcoin, bringing Uniswap-style trading to the Bitcoin ecosystem.
Anyone can become a liquidity provider by depositing assets (e.g., BTC and USDB) into an AMM pool. In return, they earn a share of the trading fees generated by the pool.
How Bitcoin AMMs Work
When you trade on a Bitcoin AMM, you're swapping one asset for another in a liquidity pool. The price is determined by the ratio of assets in the pool. As you buy BTC from the pool, the BTC supply decreases and the price increases — this is the bonding curve in action.
The constant product formula ensures that the pool can always provide a price, no matter the trade size. However, larger trades cause more price impact (slippage), which is why pool depth matters.
Flashnet's Bitcoin AMM
Flashnet operates one of the first production Bitcoin AMMs on Spark. Unlike AMM-only protocols, Flashnet combines its AMM with an order book for superior execution. Large trades route through the order book to minimize slippage, while the AMM provides guaranteed baseline liquidity.
Estimate your trade's price impact using the Slippage Calculator.
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