Enshrined AMM

Definition ∞ An enshrined Automated Market Maker is a liquidity provision system integrated directly into a blockchain protocol’s core code. Unlike typical AMMs deployed as smart contracts on a blockchain, an enshrined AMM is a native component of the layer-1 protocol itself. This integration can yield benefits such as lower transaction fees, enhanced security guarantees, and tighter coupling with the network’s consensus mechanism. It aims to optimize decentralized exchange functions by reducing reliance on external smart contract execution layers.
Context ∞ The key discussion surrounding enshrined AMMs involves their potential to significantly alter the landscape of decentralized finance by offering superior performance and security characteristics. Its situation is characterized by ongoing research and development in various layer-1 protocols considering or implementing such native liquidity solutions. A critical future development will be observing how enshrined AMMs compete with and potentially reshape the existing ecosystem of smart-contract-based AMMs, particularly concerning capital efficiency and composability.