# Glossary

#### **Automated Market Maker (AMM)**

A type of decentralised exchange that facilitates the exchange of assets through liquidity pools rather than conventional order books. They work by using a mathematical formula to price assets based on the amounts deposited and withdrawn from the pool through trading and liquidity provision.

#### **Limit Order**

An order to purchase or sell a token at a specified price or better. A buy limit order (or 'bid' order) will be executed only at the limit price or lower. A sell limit order (or 'ask' order) will be executed only at the limit price or higher. 

#### **Liquidity Provider**

In the context of AMMs, the party that facilitates trading by providing liquidity and acting as the counterparty to fulfill those trades. Liquidity providers contribute a supply of tokens and earn trading fees on trades executed through the pool.

#### **Market Maker**

In traditional financial markets, refers to a market participant who provides liquidity by continuously offering to buy or sell large quantities of a particular asset to facilitate trading in a market. See [Liquidity Provider](#liquidity-provider) for the same in the context of Automated Market Makers.