Multibit's Ordinals Automated Market Maker (OAMM) is a decentralized exchange protocol designed specifically for trading Ordinals ($ORDI) tokens. It leverages the principles of automated market making to provide liquidity, enable seamless token swaps, and facilitate efficient price discovery for $ORDI and other paired tokens.
Users can swap between $ORDI tokens and the paired tokens directly within the AMM. By inputting the desired amount of one token, the AMM automatically calculates and executes the trade based on the current reserve ratios. This allows for seamless and instant token swaps at a fair market price.
Through the continuous trading activity and interaction with liquidity pools, an Ordinals AMM dynamically adjusts token prices based on the supply and demand of the traded assets. This process enables efficient price discovery, as prices are determined by the ratio of tokens within the pool.
Users can become liquidity providers by depositing an equal value of $ORDI tokens and the paired token into the liquidity pool. In return, they receive liquidity provider (LP) tokens representing their share of the pool. Liquidity providers earn trading fees proportional to their share of the pool and help ensure sufficient liquidity for traders.