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For those who want to understand an AMM's trading strategy and may find the math too complex to follow, here's a grossly oversimplified way to understand how the trading strategy works: Say you have an asset that's volatile but no signifcant long-term trend. That is, its price changes a lot, but doesn't really move up or down very much. That means that the movement you typically see is an excursion in price followed by a return in price. Like $100->$110->$100 or $100->$90->$100. But let's look at those two movements. $100->$110 is +10%. But $110-$100 is -9.1%. The average percentage movement is positive. Similarly, $100->$90 is -10% but $90->$100 is +11.1%. Again, the average percentage movement is positive. If you have an asset whose volatility exceeds its long-term trend, the average percentage movement will be positive. If the long-term trend is negative, that just reduces the average somewhat. If the long-term trend is positive, that increases it somewhat. It's not difficult to implement a trading strategy whose yield tracks the average percentage movement of the stock. For example, buying some amount of a stock then always buying or selling the stock to keep the value of your holdings constant has that property. The trading strategy an AMM implements, though more complex than that simple one, also has this property of harvesting volatility. Note that this analysis only works for an AMM between an asset that's fixed in price and an asset whose price is volatile enough to overwhelm its long-term trend. AMM's work even when those constraints aren't met, but their behavior is different. Generally it's still pretty good as long as there isn't a long-term negative price movement that exceeds the volatility.