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

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.

What Is the Difference between an AMM and an Order Book DEX?

How Does the Constant Product Formula (X Y = K) Enforce Price Parity with External Markets?

What Is the Difference between an AMM and a Central Limit Order Book (CLOB)?

How Do Arbitrageurs Profit from the Price Difference Caused by the X Y=k Formula?

What Is the Fundamental Difference between an Order Book and an Automated Market Maker (AMM)?

What Is an Automated Market Maker (AMM)?

What Is the Difference between an Order Book DEX and an AMM-based DEX?

What Is the Difference between Price-Time Priority and Pro-Rata Order Matching?

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