Introduction

At the heart of MochiSwap’s architecture lies the Automated Market Maker (AMM)—a revolutionary concept that eliminates the need for traditional, centralized order books and intermediaries. Instead, traders interact with liquidity pools managed by smart contracts, enabling near-instant trades and a more inclusive financial ecosystem. By depositing token pairs into these liquidity pools, anyone can become a liquidity provider (LP) and earn a portion of the fees generated from each trade. This model not only streamlines the process of buying and selling tokens but also democratizes access to financial markets, empowering users with varying capital sizes to participate in and benefit from the growing DeFi landscape.

Beyond mere convenience, MochiSwap’s AMM structure delivers improved efficiency and transparency. Smart contracts transparently govern how trades occur and how fees are allocated, reducing the risk of manipulative behaviors often associated with centralized platforms. Additionally, because AMMs operate continuously and without permission, anyone can introduce new tokens or pools—fostering innovation while minimizing barriers to entry.

In the following pages, we will delve into two core variants of the AMM model that drive MochiSwap’s liquidity engine: cpAMM (Constant Product AMM): A foundational approach where token prices are determined by a simple mathematical formula, ensuring that supply and demand stay in perpetual balance. clAMM (Concentrated Liquidity AMM): An evolution of the traditional AMM design that allows liquidity providers to concentrate their capital within specific price ranges, leading to higher capital efficiency and potentially greater returns.

By exploring both cpAMM and clAMM in detail, you’ll gain a comprehensive understanding of how MochiSwap’s AMM framework underpins its broader mission to deliver seamless, permissionless, and user-centric DeFi trading experiences.