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hey bloomies welcome back to bloom Academy in part two of our series on the evolution of decentralized exchanges last time we talked about the early days of dexes and their challenges like poor liquidity and scaling issues today we're diving into how automated market makers or amms and layer 2 Solutions came to the rescue let's get started back in 2017 a game changer hit the scene Unis swap instead of using order books like the first dexes Unis swap introduced automated market makers or amm amm use liquidity pools managed by smart contracts this means Traders didn't have to wait for a match liquidity was always there no more G where's my counterparty moments even cooler anyone could provide liquidity and earn fees for doing it so not only did Unis swap make trading easier but it also gave people a way to earn passive income sweet right of course nothing's perfect Unis swap had its issues like slippage and scalability enter platforms like sushi Swap and curve they refined the amm model by optimizing liquidity pools for specific types of Trades like stable coins less slippage better trades win-win and then there's the scalability problem with ethereum gas fee spiking trading on Dex is got expensive fast that's where layer 2 Solutions stepped in platforms like looping and zks swap used rollup Tech optimistic rollups and ZK rollups to handle transactions offchain and then bundle them onto the blockchain result thousands of Trades per second with way lower fees that's the kind of speed and cost efficiency Dex is needed to level up by 2020 even more advanced amm came along like the injective protocol these platforms added features like concentrated liquidity instant settlement and more efficient trading strategies with these Innovations dex's started looking like serious competition to centralized exchanges so bloomies amm and layer 2 scaling completely transformed dexes from clunky hard-to-use platforms into efficient scalable and even profitable tools for Traders but we're not done yet in part three we'll talk about hybrid dexes and how they're Bridging the Gap between centralized and decentralized trading if you're loving this series Smash that like button and subscribe to bloom Academy for more crypto knowledge see you in the next one
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