> For the complete documentation index, see [llms.txt](https://cardax.gitbook.io/cardax/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://cardax.gitbook.io/cardax/eamm-protocol.md). # Extended Automated Market Maker (EAMM) protocol The EAMM protocol we are currently working on aims to be an improved version of the AMM existing protocols. One of the problems of AMM the relative high barrier to entry. So let's say you build a Cardano native token called Patiencetoken (PTT) and you want to create a market to be able to trade it against ADA. In order to create the pair ADA/PTT you'll need to provide both ADA and PTT. Providing PTT is not a problem because you are the issuer (you can issue as many tokens as you want). The problem is that maybe you don't have a lot of ADA. So you end up with a tiny, rather iliquid pool. Many small projects face this exact problem currently on Uniswap. This is one of the problems the EAMM protocol aims to solve. How would the EAMM protocol solve this? The protocol will allow the option (when you create a new pair) to give the pricing power to takers. So the price discovery mechanism relays only on the takers. Makers, under this scenario, don't have any control on the price. This is an option the protocol will give to people that create a new pair and don't want to put a large amount of capital. Ultimately is the new pair creator the one who decides if he/she wants to take this option or not. Both will be possible on Cardax DEX. The second problem that AMM protocols have is [impermanent loss](https://academy.binance.com/en/articles/impermanent-loss-explained). Cardax's EAMM protocol aims to give a solution to the impermanent loss problem. Here are 2 different approaches to solve the probles of an AMM system 1. [Dodo's approach](https://dodoex.github.io/docs/docs/pmm/) 2. [Ergo's approach](https://github.com/ergoplatform/eips/pull/27) --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://cardax.gitbook.io/cardax/eamm-protocol.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.