How Do AMMs Handle Trades for Assets That Do Not Have a Direct Liquidity Pool Pairing? ⎊ Path

How Do AMMs Handle Trades for Assets That Do Not Have a Direct Liquidity Pool Pairing?

AMMs handle trades for assets without a direct pairing through a process called routing. The AMM's router will automatically find a path through multiple liquidity pools to complete the trade.

For example, to trade Token A for Token C, the router might first trade Token A for Token B (a common intermediary like ETH or a stablecoin), and then trade Token B for Token C. This process may involve multiple "hops" and can result in higher transaction fees and slippage for the user.

How Do Automated Market Makers (AMMs) in Options Trading Handle Liquidity Risk?

How Do Automated Market Makers (AMMs) Handle Large-Scale Liquidations Compared to Traditional Order Books?

What Are the Security Risks Associated with Complex Multi-Hop Swaps in DeFi?

What Is “Pool Hopping” and How Do PPLNS Schemes Mitigate It?

How Does Multi-Hop Routing Affect the Final Price a User Receives for Their Trade?

What Is the Function of a Liquidity Provider in a Decentralized Exchange (DEX)?

How Do Automated Market Makers (AMMs) in DeFi Address Liquidity Provision for Large Trades?

How Does the Lack of a Traditional Intermediary in a DEX Affect the Concept of Fiduciary Duty?

Glossar

Amms

Framework ⎊ Automated Market Makers (AMMs) represent a foundational shift in decentralized finance (DeFi), providing liquidity and price discovery mechanisms without traditional order books.