What is an automated market maker (AMM)?
An automated market maker (AMM) is a smart contract that lets traders swap tokens against a liquidity pool instead of against another party's order: prices come from a formula applied to the pool's reserves, so trading works at any time without a counterparty being online.
Order book versus pool
A traditional exchange matches each buyer with a seller in an order book. An AMM removes the matching step: liquidity providers deposit both sides of a market into one pool, and every trader swaps against that pool.
Because the pool is always there, an AMM never closes and never needs a counterparty to be online. The cost is that the pool itself takes the other side of every trade, which moves its price away from the wider market. Traders call that effect price impact.
The constant-product formula
The best-known rule is Uniswap's x · y = k: the pool keeps the product of its two token balances constant, so buying one token raises its price along a curve with each fill. The formula is simple enough to compute on chain, and it is why any ERC-20 pair can have a working market from two deposits.
Newer designs refine the same idea. Concentrated liquidity lets a provider allocate their tokens across only a price range they choose, which multiplies the depth their capital offers near the current price. A singleton design such as Uniswap v4 holds every pool in one contract, which makes pools cheaper to create and lets each one carry extra logic: a hook.
Related: Uniswap v4 hooks, explained How v4 pools execute inside one contract and take extra rules from a hook.
Fees and who earns them
Each swap pays an LP fee, a fraction of the trade set by the pool, which accrues to the positions whose liquidity was actually used. That fee compensates LPs for lending assets to strangers' trades; providing liquidity is not risk-free, because the pool's mix shifts as prices move around them.
Related: What is a liquidity provider (LP)? How positions earn fees, what divergence loss is, and what in-range means.
Where Hookr fits
Hookr's current generation opens Uniswap v4 pools on Robinhood Chain (chain id 4663) in two ways: an Instant Launch opens a locked token-only sell band in the launch transaction, while a successful clearing-price auction migrates into a locked full-range position. The pool's base AMM math stays Uniswap's; the hook chosen before launch adds per-swap rules, and those parameters are readable before trading.
Related: Current launch paths in the docs Instant pool opening, auction settlement, and retained historical curves.