Uniswap Whitepaper (Automated Market Maker)

A traditional exchange (or an early decentralized exchange copying that model) needs to match a buyer's order with a seller's order at an agreed price — a system called an order book. On Ethereum, maintaining a live order book on-chain is prohibitively slow and expensive because every order update costs a transaction fee. Uniswap's whitepaper proposed something structurally different: an Automated Market Maker (AMM), where a smart contract holds a pool of two tokens, and prices are set automatically by a simple formula rather than by matching human orders at all — anyone can trade against the pool at any time, and anyone can deposit tokens into the pool to earn a share of trading fees.