AMM Coin Launches for Dummies 🚀

What is an AMM?

An Automated Market Maker (AMM) is a system that sets token prices and fills buy orders automatically. Instead of using traditional buyers and sellers like a stock market, an AMM uses a pricing formula and a pool of available tokens to handle trades.

When a new coin launches on focus, the AMM starts with a set amount of tokens at different price levels. Buyers place bids, and the AMM fills the highest bids first, giving buyers tokens from the cheapest available price levels.

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How AMM Pricing Works on FOCUS

When a new coin launches, the AMM is configured with four key settings:

1. Start Price: The lowest price at which tokens will be sold. (Example: $0.001)
2. Price Increase %: How much the price increases per level. (Example: 10%)
3. Final Price: The highest price at which tokens will be sold. (Example: $10.00)
4. Total Tokens in AMM: The total supply of tokens available in the AMM. (Example: 97,000 tokens)

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Example Scenario

AMM Price Levels Before Any Orders

We're Launching Dummies coin The AMM Settings are as follows:

Start Price: $0.60
Price Increase: 10% (to simplify well say this is just a flat 10c Increase)
Final Price: $1.00
Total Tokens in AMM: 5000

The AMM will create levels from the start price to the end price each one going up by the amount set in price increase. In this example there are 5 levels, so we distribute the total tokens in the AMM evenly between the 5 levels which gives us:

💰 $1.00 → 1,000 tokens

💰 $0.90 → 1,000 tokens

💰 $0.80 → 1,000 tokens

💰 $0.70 → 1,000 tokens

💰 $0.60 → 1,000 tokens

Total: 5,000 tokens in the AMM

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How Bids Are Filled

Buyers place bids, and the AMM fills the highest bids first, pulling from the lowest available price upwards.

Let’s look at the order book for 4 buyers placing bids for this new token launch.

Username	Tokens bid on	price per token
Bob	500	$1.00
Alice	1200	$0.90
Charlie	1500	$0.85
Susan	2000	$0.75

Now let's see how the tokens in the AMM are distributed at launch

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Bob's Order (500 tokens at $1.00)

✅ Bob places an order for 500 tokens at $1.00.

✅ The AMM fills his order at the cheapest available level ($0.60).

✅ Bob pays $1.00 per token, but the AMM only “sells” the tokens from the $0.60 price level.

📌 Bob pays: $500

📌 The AMM keeps: $200 profit (the use for this is still undecided by Nader)

📌 Remaining at $0.60: 500 tokens left

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Alice’s Order (1,200 tokens at $0.90)

✅ Alice places an order for 1,200 tokens at $0.90.

✅ The AMM fills her order starting at $0.60 (500 tokens).

✅ Then, the AMM fills the rest (700 tokens) at $0.70.

📌 Alice pays: $1,080

📌 The AMM keeps: $360 profit

📌 Remaining at $0.70: 300 tokens left

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Charlie’s Order (1,500 tokens at $0.85)

✅ Charlie places an order for 1,500 tokens at $0.85.

✅ The AMM fills his order starting at $0.70 (300 tokens).

✅ Then, the AMM fills 1,000 tokens at $0.80.

✅ Charlie still needs 200 more tokens, but there are no tokens left below $0.85.

📌 Charlie’s order is only partially filled with 1,300 tokens.

📌 Remaining at $0.80: 0 tokens left

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Susan’s Order (2,000 tokens at $0.75)

❌ Susan places an order for 2,000 tokens at $0.75, but there are NO tokens left at $0.75 or lower.

❌ Her order is completely unfilled.

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Key Takeaways

• The Highest Bids are filled from the cheapest price levels first.
• You must bid high enough to guarantee tokens but you’ll still get the lowest possible price.
• The AMM keeps the difference when buyers overpay (e.g., Bob paid $1.00 but got tokens at $0.60).
• If your bid is too low and tokens run out before reaching your price, your order won’t be filled.