  As an integral part of the decentralized finance (DeFi) ecosystem,
decentralized exchanges (DEXs) with automated market maker (AMM) protocols have
gained massive traction with the recently revived interest in blockchain and
distributed ledger technology (DLT) in general. Instead of matching the buy and
sell sides, automated market makers (AMMs) employ a peer-to-pool method and
determine asset price algorithmically through a so-called conservation
function. To facilitate the improvement and development of automated market
maker (AMM)-based decentralized exchanges (DEXs), we create the first
systematization of knowledge in this area. We first establish a general
automated market maker (AMM) framework describing the economics and formalizing
the system's state-space representation. We then employ our framework to
systematically compare the top automated market maker (AMM) protocols'
mechanics, illustrating their conservation functions, as well as slippage and
divergence loss functions. We further discuss security and privacy concerns,
how they are enabled by automated market maker (AMM)-based decentralized
exchanges (DEXs)' inherent properties, and explore mitigating solutions.
Finally, we conduct a comprehensive literature review on related work covering
both decentralized finance (DeFi) and conventional market microstructure.
