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Explain the Role of “Arbitrageurs” in Keeping the AMM Price Aligned with Centralized Exchange Prices

Arbitrageurs profit by trading between DEXs and CEXs, which automatically corrects AMM price deviations and minimizes long-term slippage.
Greeks.Live10.11.25

Explain the Role of “Arbitrageurs” in Keeping the AMM Price Aligned with Centralized Exchange Prices.

Arbitrageurs monitor the prices on decentralized exchanges (DEXs) and centralized exchanges (CEXs). If a trade on the DEX causes the AMM price to deviate significantly from the CEX price, arbitrageurs will execute trades to profit from this difference.

By buying the underpriced asset on one venue and selling it on the other, they push the AMM price back toward the CEX price, ensuring the DEX price remains competitive and correcting the temporary price distortion (slippage) caused by the initial trade.

How Do ‘Decentralized Exchanges’ (DEXs) Differ from ‘Centralized Exchanges’ (CEXs)?
What Is the Relationship between a Cryptocurrency’s Trading Volume and Its Potential for High Slippage?
Why Do Centralized Exchanges (CEX) Often Have Tighter Spreads for Altcoins than Decentralized Exchanges (DEX)?
How Does a Decentralized Exchange (DEX) Differ from a Centralized Exchange (CEX)?

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