Why can a swap move the price so much?
The answer often starts with liquidity.
On an AMM, trades interact with liquidity pools instead of a traditional order book.
The deeper the pool, the more trading activity it can generally absorb before the pool price moves significantly.
When liquidity is low, even a relatively small trade can change the asset ratio inside the pool. That can create higher price impact.
This is why checking the token price alone is not enough.
Before making a swap, it is useful to understand the liquidity behind that market and how your trade could affect execution.
Liquidity is not just a number.
It is part of the market structure that determines how a DEX trade behaves.
@STONfi DEX
#DeFi #DEX #TON #STONfi
The answer often starts with liquidity.
On an AMM, trades interact with liquidity pools instead of a traditional order book.
The deeper the pool, the more trading activity it can generally absorb before the pool price moves significantly.
When liquidity is low, even a relatively small trade can change the asset ratio inside the pool. That can create higher price impact.
This is why checking the token price alone is not enough.
Before making a swap, it is useful to understand the liquidity behind that market and how your trade could affect execution.
Liquidity is not just a number.
It is part of the market structure that determines how a DEX trade behaves.
@STONfi DEX
#DeFi #DEX #TON #STONfi
