EthereumIntermediateHow does an automated market maker like Uniswap set prices?
Uniswap prices tokens from its own reserves: in a constant product pool x * y = k, so the price is the reserve ratio and every trade moves it. Arbitrage keeps pools in line with the market, while LPs bear impermanent loss.
#defi#markets#smart-contracts
Deepak Tewatia · 6 min
