What is an Automated Market Maker and why do I need one?

An Automated Market Maker is an algorithm that automatically provides buy and sell prices for every outcome in a market. It uses a mathematical model (LMSR) to calculate prices based on the current distribution of shares, ensuring prices always reflect implied probabilities that sum to 100%. For operators, the AMM is essential at launch because it guarantees every market has liquidity from day one. The operator controls the subsidy amount, risk parameters, and profit margins. Without an AMM, new markets sit empty until enough users arrive to trade with each other.