Automated Market Makers in Cryptoeconomic Systems: A Taxonomy and Archetypes

Proper design of automated market makers (AMMs) is crucial for decentralized token exchanges in cryptoeconomic systems. At the intersection of software engineering and economics, AMM design is, however, complex and, if done inappropriately, can lead to financial risks and inefficiencies. To address this, we developed an AMM taxonomy for systematically comparing AMM designs and propose three AMM archetypes that meet key requirements for token issuance and exchange. This work bridges software engineering and economic disciplines, providing guidance for designing AMMs tailored to diverse use cases and fostering sustainable cryptoeconomic systems.