Pi Network launches AMM! Tens of millions of users welcome the new era of Pi coin Decentralized Finance.

Pi Network officially integrates Automated Market Makers (AMM) into the Decentralized Exchange (DEX), allowing users to trade Pi coin on-chain without any intermediaries. Through this upgrade, users can trade Pi coin in real-time on-chain, lend out and earn trading fees, and participate more actively in the Pi ecosystem. Testnet functions are now online, and Mainnet deployment is progressing smoothly. However, Pi Network still faces challenges such as liquidity and regulation.

The Core Significance of Pi Network Integrating AMM

(Source: Pi Network)

Pi Network integrates AMM technology into its DEX, allowing for direct exchange of Pi coin without the need for intermediaries. AMM (Automated Market Maker) replaces traditional order book-supported liquidity pools with smart contract-based liquidity pools, where prices are automatically determined by supply and demand. This is an important milestone in the development of decentralized finance (DeFi) and a significant step for Pi Network towards a more community-focused trading system.

Traditional Centralized Exchanges rely on an order book mechanism, where buyers and sellers need to match to complete a transaction. This model requires sufficient trading depth and Liquidity; otherwise, issues such as excessive slippage or inability to execute trades may occur. More importantly, Centralized Exchanges require users to entrust their Pi coins to the exchange, which involves custody risks and privacy leakage issues. The emergence of AMM has fundamentally changed this model.

In the AMM system, users interact directly with the liquidity pool in the smart contract, rather than matching with other traders. The liquidity pool consists of token pairs provided by other users, and the price is automatically adjusted according to the constant product formula (such as Uniswap's x × y = k). This mechanism ensures that liquidity is available at all times, allowing trades to be executed immediately without waiting for buyers and sellers to match.

For Pi Network, a global community with tens of millions of registered users, the integration of AMM is of great significance. It enables Pi coin holders to trade Pi coins in a completely decentralized manner, anytime and anywhere, without relying on any centralized entity. Users' Pi coins always remain in their own wallets, and transactions are automatically executed through smart contracts, which are transparent and immutable.

Core changes brought by Pi Network AMM integration

No Intermediary Trading: Users can trade Pi coins directly on-chain, without going through a Centralized Exchange.

Instant Liquidity: AMM liquidity pools ensure that transactions can be completed at any time.

Passive Income Opportunity: Liquidity providers can earn trading fees by depositing assets into the liquidity pool.

Completely Transparent: All transactions and pricing mechanisms are publicly available on-chain and can be audited.

Global Consensus Value (GCV) and Ecological Expansion

One of the new elements integrated this time is the Global Consensus Value (GCV). Pi Network is a mobile-first mining company founded by Stanford University graduates Dr. Nicolas Kokkalis and Dr. Chengdiao Fan. The network has tens of millions of registered users worldwide, reflecting its growing global community. GCV brings new opportunities to the Pi ecosystem.

GCV is a value consensus mechanism proposed by the Pi Network, aimed at establishing a benchmark value for Pi coin. Unlike Bitcoin, where the price is entirely determined by market supply and demand, GCV attempts to anchor the value of Pi coin through community consensus and actual use cases. This mechanism plays a crucial role in the AMM system, providing a price reference benchmark for liquidity pools.

Now, liquidity providers can earn fees by depositing assets into the funding pool. In the AMM system, each transaction generates a small portion of transaction fees (usually 0.3%), which are distributed proportionally to the liquidity providers. For Pi coin holders, this creates passive income opportunities. They can deposit idle Pi coins into the liquidity pool to earn transaction fees, rather than just holding them and waiting for appreciation.

Developers can leverage these resources to create decentralized applications (dApps) based on Pi coin and its liquidity system. The openness of AMM means that any developer can call liquidity pools for token swaps without needing permission or paying additional fees. This opens up infinite possibilities for application development within the Pi ecosystem. For example, developers can build decentralized payment applications, lending platforms, prediction markets, or NFT trading markets, all of which can seamlessly integrate Pi coin's AMM trading functionality.

The Testnet features (DEX, AMM, token creation) are now online; the Mainnet deployment is progressing smoothly. This means that the Pi Network team has adopted a cautious development strategy, first verifying the stability and security of the AMM mechanism in the Testnet environment before deploying it to the Mainnet. The Testnet allows developers and community members to experience new features in advance, identify potential issues, and provide feedback.

Challenges and Risks Faced by Pi Network

Despite achieving this milestone, Pi Network still faces challenges. Ensuring that the Pi coin liquidity pool has sufficient liquidity remains key to facilitating trades. In an AMM system, liquidity depth directly affects the trading experience. If the funds in the liquidity pool are insufficient, large transactions will cause significant price slippage, preventing traders from completing their trades at the expected price.

Due to its stability based on GCV, market fluctuations may lead to a temporary gap between on-chain prices and market prices. This price deviation is common in the crypto market and is usually corrected by arbitrage traders buying and selling between different markets. However, if there is insufficient market liquidity for Pi coin or too many trading restrictions, this price correction mechanism may not operate effectively.

Another challenge is user education. For many of the tens of millions of users in Pi Network, DeFi and AMM are entirely new concepts. They may not understand professional terms such as impermanent loss (the losses liquidity providers may suffer due to price fluctuations), slippage, or smart contract risks. Pi Network needs to invest significant resources in user education to help community members safely use AMM features.

In addition, there is also uncertainty in regulatory aspects. Regions such as India and the United States continue to enforce strict cryptocurrency regulations, which may affect the speed of implementation. The U.S. Securities and Exchange Commission (SEC) has an unclear regulatory stance on DeFi protocols, especially concerning token issuance and trading platforms. The Indian government takes a cautious approach towards cryptocurrencies; although not completely banned, tax and regulatory requirements may limit the operation of Pi Network.

Finally, the deployment of the AMM Mainnet and the full deployment of the DEX are still ongoing, so this is just a developmental stage, not the final transition stage. The migration from Testnet to Mainnet requires addressing a series of technical and security issues, including smart contract audits, performance optimization, and emergency response mechanisms.

Future Development and Web3 Vision

For users, this update will enable them to more conveniently access DeFi in the Pi wallet and other related systems. This strengthens the fundamental mission of the Pi Network, which is to decentralize financial activities, empowering the community to free itself from reliance on centralized intermediaries. This is highly consistent with the core philosophy of Web3: users own their data and assets, interacting through decentralized protocols instead of relying on centralized platforms.

This update will benefit both community users (pioneer users) and developers. Pioneer users can earn passive income by providing liquidity, freely trade Pi coins through decentralized exchanges, and participate in emerging Pi ecosystem applications. Developers will have access to robust financial infrastructure to build innovative dApps on, without needing to create trading and liquidity mechanisms from scratch.

As the scale of the project expands, it will face risks related to liquidity, education, and regulation, but it will also gain more opportunities. If Pi Network can successfully attract enough liquidity providers, establish a sound user education system, and maintain an active dialogue with regulatory agencies, it has the potential to become one of the largest community-driven DeFi platforms.