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Automated market maker
An automated market maker (AMM) is a smart contract that sets prices by formula instead of matching buyers with sellers. Traders swap against a pool of two tokens, and the price moves with the ratio of the tokens left in the pool.
What it means for you. Because the price is set by the pool's balances, a large trade against a small pool gets a noticeably worse rate than the quoted price. Check the price impact shown before you confirm a swap, and compare it with the size of your trade.
Sources: Uniswap docs: How Uniswap works, BIS Quarterly Review: DeFi risks and the decentralisation illusion, Uniswap docs: Understanding returns (v2) · checked 4 October 2026
Order book
An order book is the live list of offers to buy (bids) and offers to sell (asks) for an asset on a trading venue, sorted by price. Each line shows a price and how much someone is willing to trade there.
What it means for you. The book shows how much you could sell before the price drops. If only small orders sit near the top, a larger sale eats through several price levels and the average you receive falls. A thin book on a quiet coin is the usual reason a sale comes back short of the quoted price.
Sources: CFTC: Glossary, SEC Investor Bulletin: Trading Basics, FINRA: Understanding Market Liquidity and Your Investments · checked 4 October 2026