How Is the Price of a Token Determined within a Liquidity Pool?
The price is determined by the ratio of the two tokens in the pool, governed by the Automated Market Maker's (AMM) mathematical formula. For example, in a constant product pool (x times y equals k), if a user buys token Y, they remove Y and add X, which changes the ratio, making Y more expensive and X cheaper for the next trade.
The price is dynamic based on trade volume.