Automated Market Maker (AMM), sometimes referred to as a Constant Function Market Maker, in place of an order book.
At a very high level, an AMM replaces the buy and sell orders in an order book market with a liquidity pool of two assets, both valued relative to each other. As one asset is traded for the other, the relative prices of the two assets shift, and a new market rate for both is determined. In this dynamic, a buyer or seller trades directly with the pool, rather than with specific orders left by other parties. The advantages and disadvantages of Automated Market Makers versus their traditional order book counterparts are under active research by a growing number of parties.
Example
AMM is like a unmanned supermarket but except it has intelligence where the price of each item can be coupled with other item and therefore adjusted dynamically based on demand and supply between those items, thus purely market-driven. In other words you can offer your Fanta in exchange for a Kitkat if the current price allows, instead of buying with fiat, you are able to do all this while not a single cashier, staff or security guard is needed.
