Hybrid AMM

Definition ∞ A Hybrid AMM, or Hybrid Automated Market Maker, is a type of decentralized exchange liquidity protocol that combines features from different AMM models to optimize capital efficiency and reduce impermanent loss. Unlike traditional constant product AMMs, hybrid versions may incorporate elements like concentrated liquidity or dynamic fee structures to better serve specific asset pairs or market conditions. This approach aims to provide more efficient trading and improved returns for liquidity providers. It represents an evolution in decentralized exchange design.
Context ∞ The development of Hybrid AMMs is a significant area of innovation within decentralized finance, addressing limitations of earlier AMM designs and seeking to improve the overall efficiency of digital asset trading. News often covers new protocols introducing novel hybrid models and their impact on liquidity provision and trading costs. These advancements are crucial for the continued growth and competitiveness of decentralized exchanges against centralized counterparts.