Lead · Protocol Encyclopedia
An AMM has no human quoting prices — just a math formula doing the calculation. But the formula alone won't track the external market; it's arbitrageurs, not the protocol, who actually keep prices aligned.
Ethan Cross
·
July 23, 2026
Traditional exchanges — whether for stocks or centralized crypto trading — determine price through an order book: buyers post the price and quantity they want to buy, sellers post the price and quantity they want to sell, and the system matches them in real time, with the executed price becoming the market price. But an automated market maker (AMM) has no order book at all, and no real person...