How do decentralized exchanges set prices without an order book?
It’s worth understanding automated market makers (AMMs).
AMM prices are determined solely by the ratio of the two tokens in a liquidity pool. When the pool’s price diverges from the external market price, arbitrage trades push it back toward the external price.
Don’t place an order just because everyone around you is buying.
$UNI is the governance token of Uniswap, which popularized AMMs. Current price: 6.937.
It’s worth understanding automated market makers (AMMs).
AMM prices are determined solely by the ratio of the two tokens in a liquidity pool. When the pool’s price diverges from the external market price, arbitrage trades push it back toward the external price.
Don’t place an order just because everyone around you is buying.
$UNI is the governance token of Uniswap, which popularized AMMs. Current price: 6.937.