> For the complete documentation index, see [llms.txt](https://docs.soroswap.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.soroswap.finance/additional-resources/01-concepts/amm.md).

# AMM

#### What is an AMM?

An [**Automated Market Maker (AMM)**](https://developers.stellar.org/docs/learn/encyclopedia/sdex/liquidity-on-stellar-sdex-liquidity-pools#automated-market-makers-amms) is a decentralized protocol that facilitates asset exchanges without relying on a traditional order book. Instead of using buy and sell orders, [AMMs ](https://stellar.org/blog/developers/introducing-automated-market-makers-on-stellar?locale=en)employ mathematical formulas to determine asset prices based on the relative quantities within their liquidity pools.

Soroswap.Finance operates as an AMM with its own [liquidity pools](https://docs.soroswap.finance/01-concepts/02-pools), distinct from other AMMs like Stellar Classic DEX or Phoenix. Soroswap.Finance ensures that asset swaps are managed autonomously and efficiently, maintaining liquidity and price stability through its decentralized framework.

To understand [How Soroswap AMM Works](https://docs.soroswap.finance/01-protocol-overview/01-how-soroswap-works).