> For the complete documentation index, see [llms.txt](https://whitepapercrypto.gitbook.io/pex/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://whitepapercrypto.gitbook.io/pex/auto-equilibrium-engine-aee/aee-overview.md).

# AEE Overview

The Auto Equilibrium Engine (AEE) is a central component of the PEX platform, designed to optimize market efficiency, promote fair trading practices, and foster user engagement.

1. **Balancing Stakeholder Interests**: AEE encourages collaboration between traders and liquidity providers (LPs) by aligning their incentives. It also promotes market stability by incentivizing traders to take both long and short positions, reducing one-sided exposure risks.
2. **Connecting Governance Tokens & Ecosystem**: AEE strengthens the link between token value and platform growth, offering better incentives for token holders. It also ensures fair rewards and benefits for token holders, increasing their involvement in the ecosystem.
3. **Enhancing LP Efficiency**: AEE optimizes liquidity allocation and trading volumes, providing consistent returns for LPs. Additionally, it offers more stable and predictable returns, boosting confidence and participation in the ecosystem.

To settle market imbalance, AEE adopted the automatic mechanism below:

<figure><img src="/files/edMRCbT6DvJwXfod6FiC" alt=""><figcaption></figcaption></figure>

<figure><img src="/files/LCT21PtOE6uqxqhwbcoT" alt=""><figcaption></figcaption></figure>