Skip to main content
Learn

How Do Liquidity Pools on Decentralized Exchanges (DEXs) Differ from Traditional Order Books?

Liquidity pools use algorithms to set prices, while order books rely on individual buy and sell orders.
Greeks.Live20.11.25

How Do Liquidity Pools on Decentralized Exchanges (DEXs) Differ from Traditional Order Books?

Liquidity pools on decentralized exchanges (DEXs) differ from traditional order books in that they use an automated market maker (AMM) system instead of a central limit order book. In a traditional order book, buyers and sellers place orders at specific prices, and the exchange matches them.

In a liquidity pool, users deposit pairs of assets into a smart contract, which then provides liquidity for other users to trade against. The price of the assets in the pool is determined by a mathematical formula, rather than by the actions of individual buyers and sellers.

This allows for continuous liquidity, even for assets with low trading volume.

How Does an Automated Market Maker (AMM) Differ from a Traditional Order Book Exchange?
How Do Automated Market Makers (AMMs) Differ from Traditional Order Book Exchanges in a Smart Contract Context?
How Do Decentralized Exchanges (DEXs) Differ from Centralized Exchanges in Their Vulnerability to State-Sponsored Attacks?
How Does the Concept of an Order Book Relate to the Impact of a Whale’s Large Sell Order?

About

Contact

Editorial Policy

Terms of Service

Privacy Policy

Cookie Policy

© 2025 Greeks.Live

All Rights Reserved

Greeks.Live RFQ

Build by Noo on Engine

Source: The content on this website is produced by Greeks.live's proprietary analysis systems, which utilize advanced Large Language Models (LLMs). This information might not be subject to a full human review before publication and may contain errors.
Responsibility: You should not make any financial decisions based solely on the content presented here. We strongly urge you to conduct your own rigorous due diligence and to consult a qualified, independent financial advisor.
Purpose: All information is intended for informational purposes only. It should not be construed as financial, investment, trading, or any other form of professional advice. News and data are not trading signals.
Risk: The cryptocurrency, derivatives, and options markets are highly volatile and carry significant risk. By using this site, you acknowledge these risks and agree that Greeks.live and its affiliates are not responsible for any financial losses you may incur.