DLAMM (Discretized-Liquidity-AMM) is the abbreviation of Discrete Liquidity AMM and is a new automatic The market maker (AMM) model allows liquidity providers (LPs) to concentrate liquidity at specific price points rather than spreading it across a continuous price curve.

LPs can achieve greater capital efficiency and earn more fees by providing liquidity in the most frequently traded price ranges. Traders can also enjoy lower slippage and more accurate prices when exchanging tokens.

DLAMM was first proposed by iZUMi Finance. iZUMi Finance is a decentralized finance (DeFi) platform and launched a DLAMM-based DEX, iZiSwap, in May 2022. iZiSwap uses a mathematical formula to discretize the continuous price curve into a limited number of price points and only allows LPs to provide liquidity at these points, and traders can only trade at these points. The market price will only be one of these points. The trading price will remain unchanged at a point until the liquidity on one side of the trading pair is exhausted. The market price then moves to the adjacent point and repeats the process.

DLAMM is similar to the order book model used by centralized exchanges, but does not require centralized trading Aggregation engine. DLAMM is designed to support on-chain price orders, allowing traders to specify the price and quantity of tokens they want to buy or sell.

DLAMM is one of the future development trends of DEX because it improves the constant product AMM model used by Uniswap and others. Uniswap v3 introduces centralized liquidity, allowing LPs to provide liquidity within a custom price range. DLAMM upgrades the Uniswap v3 experience by using discrete price points instead of custom intervals. DLAMM also makes limit orders possible, which was not possible in the Uniswap v3 model.

In short, DLAMM is a new AMM model that combines the advantages of the order book and the AMM model to provide users with high capital efficiency, low slippage, accurate prices, limit order functions and low gas cost.