# AMM

SushiSwap is a decentralized exchange protocol originally forked from Uniswap, sharing its core Automated Market Maker (AMM) design.

## V2: Decentralized Liquidity Pools

V2 is a decentralized exchange protocol that enables token swaps using automated liquidity pools.

### Key Features:

* **Automated Market Maker (AMM):** Trades occur through smart contracts, with users providing liquidity by depositing token pairs.
* **Constant Product Formula:** Maintains pool balance using the formula `x * y = k`.
* **Fee Structure:** A 0.30% trading fee is distributed to liquidity providers (LPs).
* **Token Pair Swaps:** Facilitates ERC-20 to ERC-20 token swaps seamlessly.

V2 introduced a simple, reliable way to trade tokens in a decentralized manner.

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## V3: Concentrated Liquidity & Customization

V3 enhances the decentralized exchange experience by introducing more flexibility and efficiency for liquidity providers and traders.

### Key Features:

* **Concentrated Liquidity:** Allows LPs to allocate capital to specific price ranges for improved efficiency.
* **Custom Fee Tiers:** Offers different fee levels (e.g., 0.01%, 0.05%, 0.30%, 1.00%) tailored to market conditions.
* **Active Position Management:** LPs can dynamically manage their positions for optimized returns.
* **NFT-Based Positions:** Each liquidity position is represented as a non-fungible token (NFT), this makes every position unique and transferable.

V3 is designed to offer advanced tools for more precise and efficient liquidity management.