Notitia
Trading without an order book.
An automated market maker (AMM) replaces the order book with a ‘pool’ of two assets. A formula (often x·y=k) sets the price from the balances. Liquidity providers deposit both assets and earn a share of fees.
This powers decentralised exchanges (Uniswap, Curve). In exchange for fees, providers are exposed to ‘impermanent loss’.
A pool holds 100 ETH and 200,000 USDC (quoted price $2,000). You sell 10 ETH at once.
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An order worth 10% of the pool costs about 9.1 % in impact. A pro splits the order, routes through an aggregator or sets a tight slippage tolerance.