Update docs/concepts/tokens/decentralized-exchange/automated-market-makers.md

Co-authored-by: Rome Reginelli <rome@ripple.com>
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2024-11-04 14:22:21 -08:00
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### DEX Interaction
AMMs are integrated with the central limit order book (CLOB)-based DEX to enhance liquidity on the XRPL. Offers and payments are automatically optimized to determine whether swapping within a liquidity pool, through the order book, or both, provides the best rate and executes accordingly. This ensures that transactions use the most efficient path for trades, whether through offers on the DEX or through AMM pools, or a combination of the two.
AMMs are integrated with the central limit order book (CLOB)-based DEX to enhance liquidity. Offers and payments are automatically optimized to determine whether swapping within a liquidity pool, through the order books, or both, provides the best rate and executes accordingly. This ensures that transactions use the most efficient path for trades, whether through offers on the DEX or through AMM pools, or a combination of the two.
The diagram below illustrates how an offer interacts with other offers and AMM liquidity in the XRPL DEX.
The diagram below illustrates how an offer interacts with other offers and AMM liquidity in the DEX.
![Offer path through XRPL DEX.](/docs/img/amm-clob-diagram.png)
![Offer path through DEX.](/docs/img/amm-clob-diagram.png)
### Restrictions on Assets