Swaps Glossary

Term	Description
Decentralised Exchange	A Decentralised exchange (DEX) is a peer to peer marketplace where traders can choose to make transactions without the need of relinquishing management of assets to a 3rd party.
Automated Market Makers	(AMM) system is that which relies on smart contracts and was created to solve the liquidity problem. It uses liquidity pools, where users can deposit cryptocurrencies to provide liquidity. These pools then use algorithms to set token prices based on the ratio of assets in the pool. On AMM platforms, instead of trading between buyers and sellers, users trade against a pool of tokens — a liquidity pool. with prices determined by the pool's algorithm. Anyone in possession of any type of ERC-20 tokens can become a liquidity provider by supplying tokens to an AMM’s liquidity pool. Liquidity providers earn a fee for providing tokens to the pool. This fee is paid by traders who interact with the liquidity pool.
Order Books	Order books dexes compile records of all open orders to buy and sell assets for specific asset pairs. Buy orders signify that a trader is willing to bid for an asset at a specific price, while sell orders indicate that a trader is ready to sell or ask a particular price for the asset under consideration. The spread between these prices determines the depth of the order book and the market price on the exchange for more information.
Dex Aggregators	DEX aggregators use several different protocols and mechanisms to solve problems associated with liquidity. These platforms essentially aggregate liquidity from several DEXs to minimise slippage on large orders, optimise swap fees and token prices and offer traders the best price possible in the shortest possible time.
ERC-20	ERC-20 is the technical standard for tokens on the Ethereum blockchain. ERC-20 allows developers to create smart-contract-enabled tokens that can be used with other products and services. These tokens are a representation of an asset, ownership, access, or anything else that is not unique in and of itself, but can be transferred.