Virtual Specialist AMM
A software 'specialist' that always quotes a two-sided market and takes the other side of every trade — the automated-market-maker idea, patented in 1996, years before AMMs became the backbone of on-chain trading.
Computer-implemented securities trading system with a virtual specialist function · HSX, Inc. · filed 1996-03-25 · granted 1999-09-07 · expired 2016-03-25
Playable, self-contained demo. Nothing is sent anywhere; it runs entirely in your browser.
The story
US5950176 came out of HSX, Inc. — the company behind the Hollywood Stock Exchange, a play-money market for movie-opening predictions — and it describes a 'virtual specialist': software that stands ready to buy or sell at all times, setting its own price as a function of its inventory. That is, structurally, the same idea that would later show up as the automated market maker (AMM), the mechanism underneath most on-chain token exchanges.
Filed March 25, 1996, expired on its own twentieth birthday in 2016 — years before AMMs entered the mainstream vocabulary through decentralized exchanges. The core idea was free well before the market that would make the most of it existed.
The demo below is a virtual specialist you can trade against: it always quotes both sides, adjusts its price with inventory, same as the 1996 filing describes.