Automated Market Makers (AMMs) are well-suited for liquidity in prediction markets. Unlike order books, AMMs allow users to trade against a liquidity pool, ensuring constant market availability even with few participants. Models like LMSR (Logarithmic Market Scoring Rule) dynamically adjust prices based on demand, supporting efficient pricing for binary or scalar outcomes. Liquidity providers earn fees or rewards, incentivizing early participation. However, AMMs may struggle with market manipulation or low-volume accuracy. To mitigate risks, hybrid models with caps, oracle verification, and volatility controls are often applied. Overall, AMMs enable decentralized, permissionless, and scalable liquidity for event-driven forecasting platforms.