Tokens that bond on the Permissionless Launcher instantly start trading on GTE’s constant-product AMM, using the 20% of supply reserved at token creation paired with capital raised from the bonding curve to seed the intial liquidity. Underpinning AMMs are liquidity pools, which are crowdsourced pools of assets for any given token pair. Depositors into these pools are called liquidity providers (LPs), and they profit from fees generated by trades using the pool liquidity. AMMs are “automated” in the sense that they operate with an established pricing function that allocates liquidity in the pool to different price levels for trading. In a constant-product AMM, LPs deposit an equal value amount of each token into the pool (50/50 distribution), and the simple x * y = k curve determines pricing. This function establishes a range of prices for the two tokens, given all the liquidity in the pool. The supplies of token x and y fluctuating must maintain a constant product k. GTE’s AMM is a fork of Uniswap V2 with tweaks to support fast, capital efficient bonding curve migrations and our upcoming fee mechanics.

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Why AMMs Excel for Long-Tail Tokens

For newer or less liquid tokens, AMMs provide crucial advantages over CLOBs: Instant Liquidity: AMMs guarantee liquidity availability even for tokens with lower trading activity without requiring active market makers to provide quotes as on a CLOB. Lower Barriers: Anyone can become a liquidity provider with minimal capital, democratizing market making for emerging tokens where professional market makers may not participate. Predictable Pricing: The constant-product formula provides transparent, algorithmic pricing. Accessible Liquidity: full-range liquidity model ensures consistent trading availability without complex position management. Community-Driven: AMMs enable token communities to bootstrap their own liquidity through LP incentives, fostering organic growth for long-tail assets. For emerging tokens and experimental projects, AMMs provide the essential infrastructure to establish initial trading activity and price discovery.

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Why a Constant Product AMM?

Concentrated liquidity models attempt to replicate order book liquidity dynamics but ultimately fall short in terms of capital efficiency and user experience. These models emerged because blockchains have historically lacked the performance needed for real-time order book matching, forcing developers to create innovative AMM alternatives that could approximate CLOB functionality. However, concentrated liquidity introduces significant complexity for LPs who must actively manage positions, adjust ranges, and monitor market conditions - overhead that becomes unnecessary when CLOBs already provide superior capital efficiency and execution for mature tokens. The UX tradeoffs of active position management aren’t worth it when sophisticated trading needs are already met by the order book. The constant-product model delivers predictable liquidity for emerging tokens through its simple x * y = k formula, eliminating position management overhead for LPs. By making passive LPing as easy as possible, this approach ensures full-range liquidity availability across all token maturity stages while maintaining transparent pricing for traders. GTE’s architecture clearly separate responsiblities across market structures: constant-product AMMs handle bootstrapping liquidity, CLOBs handles mature tokens.