What is a Discrete Liquidity Automated Market Maker DLAMM

2025lovepeace

2025-12-26 08:53:01

DLAMM (Discretized-Liquidity-AMM) is an abbreviation for Discretized Liquidity AMM, a new automated market maker (AMM) model that allows liquidity providers (LPs) to concentrate liquidity at specific price points rather than dispersing it along a continuous price curve.

LPs can achieve higher capital efficiency and earn more fees by providing liquidity within the most traded price ranges. Traders can also enjoy lower slippage and more accurate prices when swapping tokens.

DLAMM was first proposed by iZUMi Finance. iZUMi Finance is a decentralized finance (DeFi) platform that launched a DLAMM-based DEX, iZiSwap, in May 2022. iZiSwap uses a mathematical formula to discretize a continuous price curve into a finite set of price points, allowing LPs to provide liquidity only at these points, and traders can only trade at these points. The market price will only be one of these points. The trading price remains unchanged at a point until the liquidity on one side of the trading pair is exhausted. Then, the market price moves to an adjacent point and repeats the process.

DLAMM is similar to the order book model used by centralized exchanges but does not require a centralized trading aggregation engine. The design of DLAMM supports on-chain limit orders, allowing traders to specify the prices and quantities of tokens they want to buy or sell.

DLAMM is one of the future development trends of DEXs because it improves upon the constant product AMM model used by platforms like Uniswap. Uniswap v3 introduced concentrated liquidity, allowing LPs to provide liquidity within custom price ranges. DLAMM enhances the Uniswap v3 experience by using discrete price points instead of custom ranges. It also makes limit orders possible, which are not feasible in the Uniswap v3 model.

In summary, DLAMM is a new AMM model that combines the advantages of order books and AMMs, offering users high capital efficiency, low slippage, accurate pricing, limit order functionality, and low gas fees. **$DMC **$MMT **$COMMON **

DMC-3.59%

MMT-1.96%

COMMON-1.73%

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