Advantages of AMM-Based Markets in Prophecy

1. Continuous Liquidity

• Unlike traditional order book systems, AMMs ensure that users can always trade outcome tokens, regardless of market activity.

2. Dynamic Price Discovery

• Prices are automatically adjusted based on supply and demand, reflecting the collective sentiment of market participants.

3. Accessibility

• Users can participate without requiring counterparties, making the system more inclusive and efficient.

4. Incentives for Liquidity Providers

• Liquidity providers earn trading fees and, in some cases, additional rewards for contributing to market liquidity.

5. Slippage

• Buy and Sell inherently account for slippage, as prices adjust dynamically based on the pool's liquidity balance.

6. Continuous Liquidity:

• The constant product formula ensures that users can always trade shares, even in low-activity markets.

7. Fair Pricing:

• Prices are dynamically updated to reflect market sentiment and trading activity.