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What Is the Difference between an Order Book and a Liquidity Pool?

An order book matches specific buy and sell orders; a liquidity pool facilitates trades against an automated, formula-based pool of assets.
Greeks.Live14.11.25

What Is the Difference between an Order Book and a Liquidity Pool?

An order book, used by Centralized Exchanges (CEXs) and some Decentralized Exchanges (DEXs), is a list of open buy and sell orders with specified prices and quantities. Trades are executed when a buy order matches a sell order.

A liquidity pool, used by Automated Market Makers (AMMs) on DEXs, is a smart contract holding two or more tokens. Trades are executed against the pool's assets based on a mathematical formula, eliminating the need for a matching engine and direct counter-parties.

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