How it works
Different AMMs use different curves, fee tiers and liquidity concentration rules. Trades change the ratio of assets in the pool and therefore the quoted price.
What to check
Check the pricing formula, liquidity depth and price impact for the intended trade size. Large orders in thin pools can move the execution price significantly.
- Check price impact
- Understand the curve
- Compare pool price with broader markets
Limits and risks
AMM prices can diverge from broader markets until arbitrage closes the gap. Smart-contract and pool-token risks remain separate from the pricing mechanism.
Primary sources
Bitcoin Developer Reference↗Ethereum developer documentation↗FATF: Virtual Assets↗General information only. Investment products can lose value, and terms, fees and regulation can change.