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5:00AMMs: the Vending Machine That Reprices Itself
There is no order book and no market maker quoting prices. A trade against a Uniswap pool is just a withdrawal from a jar of two tokens, and the jar raises its own price the more you take.
An Automated Market Maker (AMM) replaces the buyers, sellers and order book of a normal exchange with a single pool of two tokens and one rule. On Uniswap v2 that rule is the constant product formula: x * y = k, where x and y are the reserve balances of the two tokens and k is an invariant that must stay constant (or grow) after every trade. The current price is simply the ratio of the reserves, y / x. Nobody quotes it; the jar's contents define it.
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