DeFi｜How does an AMM set prices?
LPs deposit two tokens at the current ratio and earn a share of the trading fees.
An AMM’s price is determined solely by the ratio of the two tokens in its liquidity pool. When it differs from prices in other markets, arbitrage trades bring it back toward the external price.
$UNI is the governance token of Uniswap, which popularized AMMs. Current price: 7.65.
Every return comes with corresponding risks. Make sure you understand the worst-case scenario.
#UNI
LPs deposit two tokens at the current ratio and earn a share of the trading fees.
An AMM’s price is determined solely by the ratio of the two tokens in its liquidity pool. When it differs from prices in other markets, arbitrage trades bring it back toward the external price.
$UNI is the governance token of Uniswap, which popularized AMMs. Current price: 7.65.
Every return comes with corresponding risks. Make sure you understand the worst-case scenario.
#UNI