One thing DeFi taught me pretty quickly is that a token doesn't really have one universal price.
I remember seeing slightly different prices for the same token across different platforms and thinking one of them had to be wrong.
Not necessarily.
Each DEX has its own liquidity pools, and those pools have their own state.
Every trade changes that state.
So if one pool has more buying pressure than another, or one has thinner liquidity, the quoted price can temporarily be different.
Then arbitrage traders notice.
They buy where the token is cheaper and sell where it's more expensive, pushing the different markets back toward each other.
Once I understood that, I stopped looking at DEX prices as fixed numbers.
They're really snapshots of different markets competing with each other.
And that's one reason I find routing interesting.
If liquidity is fragmented across different pools and venues, why should a trader automatically assume the first available route is the best one?
The execution layer has to look at what is actually available and determine which path makes sense for the trade.
So when I see a small price difference between markets now, I don't immediately think:
“Which one has the correct price?”
I think:
“What is happening inside those markets that created the difference?”
That question usually tells you much more.
Explore STON.fi → https://app.ston.fi/swap
$ETH #BTC Price Analysis# $XRP
I remember seeing slightly different prices for the same token across different platforms and thinking one of them had to be wrong.
Not necessarily.
Each DEX has its own liquidity pools, and those pools have their own state.
Every trade changes that state.
So if one pool has more buying pressure than another, or one has thinner liquidity, the quoted price can temporarily be different.
Then arbitrage traders notice.
They buy where the token is cheaper and sell where it's more expensive, pushing the different markets back toward each other.
Once I understood that, I stopped looking at DEX prices as fixed numbers.
They're really snapshots of different markets competing with each other.
And that's one reason I find routing interesting.
If liquidity is fragmented across different pools and venues, why should a trader automatically assume the first available route is the best one?
The execution layer has to look at what is actually available and determine which path makes sense for the trade.
So when I see a small price difference between markets now, I don't immediately think:
“Which one has the correct price?”
I think:
“What is happening inside those markets that created the difference?”
That question usually tells you much more.
Explore STON.fi → https://app.ston.fi/swap
$ETH #BTC Price Analysis# $XRP
